CHAPTER 1

Risk management is the process of identifying , evaluating , and responding to the possibilty of harmful events.

• 1. Risk avoidence
• 2. Risk reduction
• 3. Risk Shifting
• 4. Risk acceptance

Some risks are so serious that they should be avoided alltogetter.

Some risks can be reduced to an acceptable level through precautions.

Some risks maybe shifted to another party.

• 1. Insurance
• 2. Exclusion clauses.

Sometimes appropriate to accept a risk.

Insuranc is a contract in which one party agrees, in exchange for a price, to pay certain amount of money if another party suffers a loss.

Two types of insurance:

• 1. Liability
• 2. Property

it provides a benfit if the purchase is held liable for doing something wrong.

it provides a benfit if the purchaser's property is damaged, lost, or destroyed.

• 1. exclude all risk of liabilties.
• 2.