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why management plans should be updated periodically.

Risk can mean that some danger or loss may be involved in carrying out an activity and therefore, care has to be taken to avoid that loss.

This is where risk management is important, in that it can be used to protect against loss or danger arising from a risky activity.

For proper control and management of risks, as insurers, we should always keep the following in mind with regard to any project or subject-matter of insurance:

  • What are the possible sources of loss?
  • What is the probable impact of a loss should it at all occur?
  • What should be done when a loss takes place? Should the loss be allowed to enhance or something should be done to minimize it? The question of protection of salvage in the best possible way and also the question of checking the future possibility of such events should be considered.
  • The probable expenditure or the economy of loss prevention, (it should be remembered that any extra expenditure for loss prevention would be economically justified so long the expenditure made is smaller than or at best equal to the savings made by way of loss reduction.

As already mentioned, in insurance the risk is isolated from the whole business venture and the pure risk portion of it is assumed entirely by a different group of people of organization (insurer) in a most technical, expert and economic way.

This is possible only through the proper diagnosis of the risk in matters of finding out the possible sources of loss and the impact of loss should it at all occur.