Date Posted: 10/12/2011 7:09:01 AM
Posted By: Raychelle Membership Level: Silver Total Points: 184
Risk in insurance law refers to the probability of a possibility that is adverse in nature.The loss that is likely to arise in the event of risk attaching is the primary burden of the risk.As a result there is a need for one to cushion themselves against such possibility.Due to such uncertainty,various methods have evolved for handling of risk:a)Risk avoidance:This is the outright refusal of the person to accept the risk by disengaging from the activity.It is viewed as a negative approach to risk management.b)Risk retention:No positive step is taken to approach a problem.It is the most common method of managing risks.It can be voluntary or involuntary.c)Transfer of the risk:This is transfer to another person willing to accept the risk or to bear the risk for example insurance companies.d)Hedging:This is where a trader buys or sells goods for future delivery cushioning the trader against decline or increase in the market.An example is purchasing of currency.e)Risk sharing:This involves the apportionment of the risk amongst various people.An example is coming together of matatu owners.f)Risk reduction:This is effected through loss prevention mechanisms.For instance fire departments,alarms,burglar proofing.
Next: List of universities in Kenya by countyPrevious: How international laws are enforced
Get premium membership