Risks

Aperçu

Before there was ever a policy, a premium or a claim, there was risk. Insurance is simply the tool human beings invented to tame it. So the whole subject rests on one prior question: what exactly is risk, and why does it trouble us enough to pay someone else to carry it? A trader who cannot sleep for fear of fire, a father wondering what becomes of his children if he dies, a town that dreads the next flood: each is living with risk, and each is a potential customer for insurance.

In this lesson you will pin down what risk means and how it differs from mere uncertainty, trace the real cost that risk imposes on individuals, businesses and the wider society, and learn to sort any risk into its proper family: pure or speculative, fundamental or particular, financial or not. Above all you will learn the test insurers apply before they will touch a risk at all, so that you can look at any situation and say, with reasons, whether it can be insured.

Objectifs

  1. Define risk and distinguish it from uncertainty
  2. Explain the effects of risk on individuals, businesses and society
  3. Classify risk as pure or speculative, fundamental or particular, and financial or non-financial
  4. State the characteristics that make a risk insurable
  5. Distinguish insurable from uninsurable risks using worked examples

Note de cours

Two people each face a possible loss of ₦500,000. The first insures his shop against fire; the second stakes the same money on a business he hopes will double it. Both are exposed to loss, yet an insurer will gladly cover the first and will not touch the second. Why? The answer lies not in insurance at all, but in the nature of the risk each person carries. Learn to read that nature and you can predict, before any policy is written, whether a risk can be insured, who bears it, and what it costs society to leave it uncovered. Every later topic in this syllabus, from premiums to claims, is built on the foundation you lay here.

Évaluation de la leçon

Félicitations, vous avez terminé la leçon sur Risks. Maintenant que vous avez exploré le concepts et idées clés, il est temps de mettre vos connaissances à lépreuve. Cette section propose une variété de pratiques des questions conçues pour renforcer votre compréhension et vous aider à évaluer votre compréhension de la matière.

Vous rencontrerez un mélange de types de questions, y compris des questions à choix multiple, des questions à réponse courte et des questions de rédaction. Chaque question est soigneusement conçue pour évaluer différents aspects de vos connaissances et de vos compétences en pensée critique.

Utilisez cette section d'évaluation comme une occasion de renforcer votre compréhension du sujet et d'identifier les domaines où vous pourriez avoir besoin d'étudier davantage. Ne soyez pas découragé par les défis que vous rencontrez ; considérez-les plutôt comme des opportunités de croissance et d'amélioration.

  1. Which of the following best distinguishes risk from uncertainty? A. Risk involves loss while uncertainty involves gain B. Risk can be measured from data while uncertainty cannot C. Risk affects individuals while uncertainty affects society D. Risk is insurable while uncertainty is always fundamental Answer: B
  2. Which of the following is a speculative risk? A. A warehouse destroyed by fire B. A car damaged in an accident C. Buying shares in the hope that their price rises D. Goods stolen from a shop Answer: C
  3. A flood that submerges an entire town and displaces thousands is best classified as a: A. Particular risk B. Speculative risk C. Financial risk only D. Fundamental risk Answer: D
  4. The condition that increases the likelihood or severity of a loss is called the: A. Peril B. Hazard C. Loss D. Probability Answer: B
  5. Which one of the following risks is NOT insurable? A. Fire damage to a factory B. Theft of a delivery van C. Money staked on a football bet D. Death of a breadwinner Answer: C

Livres recommandés

Principles of Risk Management and Insurance
Principles of Risk Management and Insurance
Sous-titre: Thirteenth edition
Éditeur: Pearson
Année: 2016
ISBN: 978-0-13-408257-8
Description: The standard introduction to risk and insurance, covering risk management, insurer operations and the main lines of life, health, property and liability cover.
Fundamentals of Risk and Insurance
Fundamentals of Risk and Insurance
Sous-titre: Tenth edition
Éditeur: Wiley
Année: 2008
ISBN: 978-0-470-08753-4
Description: A clear account of the nature of risk and the economics of insurance, written for beginning students across life, health, property and liability insurance.
Fundamentals of Insurance
Fundamentals of Insurance
Sous-titre: Second edition
Éditeur: Himalaya Publishing House
Année: 2017
ISBN: 978-93-5097-079-9
Description: An accessible treatment of insurance in four parts: the basics of risk, insurance management, life insurance and non-life insurance.

Questions précédentes

Vous vous demandez à quoi ressemblent les questions passées sur ce sujet ? Voici plusieurs questions sur Risks des années précédentes.

WAEC SSCE - Insurance - 2018

Question 1 Rapport

 Read the case below carefully and answer the questions which follow.

                                                    UNFAVOURABLE BUSINESS ENVIRONMENT
Garola Kubusa Limited is a Manufacturer of packaging products and has been in operation for several years. The manufacturing industry has been experiencing Challenges and setbacks in recent times, the packaging sector seems to be the worst hit. The operating environment had not been conducive in the areas of power supply, fluctuating value of currency and inconsistent government policies. The plastic packaging sub-sector in which Garola Kubusa operates is not left out in these problems. The company gets its raw materials some of which are polypropylene and wax from a petrochemical plant located in Port Harbey, Rivers State from where they are transported by the company's trailers 'and at times by hired vehicles to the factory site in Asaba, Delta State. The company has not had it smooth due to losses arising from damage to plant and machinery, competition, fire, explosion, pilfering of company's finished products by the employees as well as embezzlement of funds. In severe cases, the company had to shut down for some months before repairs were carried out A good number of the company's customers had absconded with huge debts yet to be paid and left for other companies who are Garola Kubusa's competitors. The company is now considering various alternatives such as importation of raw materials, partly finished goods and finished products in order to restore customers' confidence and meet their demands and tastes while contracting out some of their manufacturing operations as Well to other companies operating in the sector.

(a) Identify and explain four classes of insurance that could help Garola Kubusa Limited in its business operations.

(b) Should Garola Kubusa Limited take insurance cover against losses arising from competition? Give reason for your answer.

(c) If the company resort to importation of its raw materials and finished products; recommend and explain the appropriate insurance cover to take to that effect. 
 

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