PRESTIGE INSTITUTE OF MANAGEMENT &

RESEARCH, GWALIOR

Topic: Risk Management and Insurance

PRESENTED TO –
PROF. AMITABH MAHESHWARI

PRESENTED BY –
1
BHOOMI SONI
SHAKTI P.S TOMAR
AMAN SHRIVASTAVA
INDRA PRATAP SINGH KAURAV
INTRODUCTION OF INSURANCE

 Insurance is a means of protection from financial

loss.

 Itis a form of risk management primarily used to

hedge against the risk of a contingent, uncertain
loss.

 An entity which provides insurance is known as an

insurer, insurance company, or insurance carrier. A
person or entity who buys insurance is known as an 2
insured or policyholder.
 ELEMENTS OF INSURANCE
Insurer:
The party (i.e. insurance company) which undertakes to protect the insured
from the specified risks and the loss so caused in consideration to a certain
premium received from the insured is known as insurer.

Insured
The person or party who seeks protection against a particular risk and pays
a certain amount in consideration to the recovery of the financial loss is
known as insured.

Premium
It is the fees paid by the insured to the insurer as the consideration of the
insurance contract for the assurance of the recovery of financial loss so
3
caused.
 ELEMENTS OF INSURANCE

Insured amount
It is the agreed financial value of the future loss caused by certain
events. Insurance is made for the recovery of this value.

Insurance policy
It is the contract between the insured and the insurer containing the
details of the terms and conditions of a certain insurance.

4
 Advantage of Insurance
 Assures for financial compensation

 Reduction of risks

 Encouragement to saving and investment

 Basis of credit

 Maintains economic stability

 Promotes business activities

5
 Provides employment opportunities
 DISADVANTAGES
 Insurance leads to negligence as the insured feels that he/she can be
compensated for any loss or damage.

 Insurance companies do not make the compensation promptly on

maturity of the policy or for the financial losses as the expectation of
the insured.

 It may lead to the crimes in the society as the beneficiaries of the

policy may be tempted to commit crimes to receive the insured
amount.

 Although insurance encourages savings, it does not provide the 6

facilities that are provided by bank.
 RISK MANAGEMENT
 “The process involved with identifying, analyzing,
and responding to risk.

 It includes maximizing the results of positive risks

and minimizing the consequences of negative
events”

7
 WHY DO WE MANAGE RISK?

 Project problems can be reduced as much as 90% by using risk

analysis.

 Positives:
 More info available during planning.
 Improved probability of success/optimum project.

 Negatives:
 Beliefthat all risks are accounted for.
 Project cut due to risk level.

8
 HOW DO WE MANAGE RISK?
 Use the ten risk management processes……

 Risk Management Planning

 Risk Identification
 Qualitative Risk Analysis
 Quantitative Risk Analysis
 Risk Response Planning
 Risk Monitoring and Control
 Probability and Impact Matrix
 Stakeholder tolerances
 Reporting formats
9
 Tracking
 RISK MANAGEMENT PLAN

 Methodology – Approach, tools, & data.

 Roles & Responsibilities.

 Budgeting – Resources to be put into risk management.

 Timing – When and how often.

 Risk Categories – Risk Breakdown Structure (RBS).

10
 Definitions – Risk probabilities and impact.
 QUANTITATIVE RISK ANALYSIS

 Analyze numerically the probability and consequence

of each risk.
 Monte Carlo analysis popular.

 Decision Tree analysis on test

 Diagram that describes a decision and probabilities
associated with the choices
 Expected Monetary Value Analysis (EMV).

11
STRATEGIES FOR HANDLING
RISK
 Negative Risks (or Threats)
 Avoid
 Transfer
 Mitigate
 Acceptance
 Positive Risks (or Opportunities)
 Exploit
 Share
 Enhance
 Acceptance

12
Methods of handling Risk

• Avoiding

• Controlling

• Accepting

• Transferring 13
 CONCLUSION
 In the world, risk is present in each and every
work and we can not totally remove it but
insurance can help us to overcome from risks and
its losses.

 Insuranceprovides financial assurance which

helps the investors to be secured with their
invested money and also inspires them to invest
money in many sectors.
14
Thank You

15