Duration: 7m 35s
Risk is a combination of hazards measured by probability. Risk implies that there is uncertainty present. The uncertainty is whether the event will take place and if it takes place what the outcome will be. The degree of uncertainty surrounding the event determines the level of risk and this can be interpreted in terms of the frequency with which an event will occur and the probability that it will display a certain outcome.
Duration: 7m 52s
Risk management is a organised strategy for controlling financial loss from pure risks as well as insurable risks. Risk management is about having a proactive attitude towards identifying risks and having a plan on how to handle those risks that cannot be managed out of the business.
Duration: 9m 57s
Risk identification can be broken down into macro identification and micro identification. Macro identification is the process of identifying risks that have the potential to have a major financial impact on the business, for example, an earthquake. Micro identification is the process that follows macro identification as it involves the identification of sub-risks within the major risks identified.
Duration: 16m 53s
Risk analysis is the second step in the risk management process and involves ranking risks according to severity, probability and potential cost. Once risks are identified it seems logical to do something about it. The next step is ranking risks according to the type and probability of occurring.
Duration: 16m 58s
Risk control refers to techniques that reduce the frequency and severity of accidental losses. Once risks have been identified and evaluated all techniques to manage the risk fall into one or more of the following four categories 1) avoidance 2) reduction 3) transfer and 4) retention.
Risk financing is a selection of methods to fund loss or possible future loss. While we can do as much as it is physically and financially practical to eliminate or reduce risks, they can never be managed away all together. Some of the losses involved are relatively small or form an unavoidable part of the normal running of the business.
Duration: 15m 55s
Risk transfer causes another party to accept the risk typically by contract. Insurance is one type of risk transfer. Losses represent wasted resources that could be used in increased production. Elimination and reduction of losses is in everyone's interests - the insured, the insurer and society at large.
Duration: 10m 41s
Alternative risk transfer is the use of techniques other than traditional insurance and reinsurance to provide risk-bearing entities with coverage or protection. ART aims to reduce or eliminate certain fundamental risks, add capacity at an affordable cost and grow the whole range of insurable risks.
Duration: 6m 56s
Risks are measured through records that have been built up into databases. Raw data is used to produce a result that can be used to manage risks more effectively. Insurers use risk measurement to decide on the level of the premium. Buyers of insurance use risk measurement to decide on economic ways of risk management and to judge whether premiums offered are realistic.
Duration: 30 mins
Captive insurance is another technique that falls under the heading of ART. A captive is a wholly-owned insurance company set up to write part or all of its parent's insurance business. Some of the larger captives may also write business for other companies. Captives are subject to the same regulation as conventional primary insurers.
Duration: 30 mins
Alternative risk transfer (ART) is a range of options forming part of the wider discipline of risk management permitting the transfer of risk without making use of risk without making use of standard insurance products. Alternative risk transfer consist of the transfer of risk through alternative carriers and/or the transfer of risk through alternative products. Alternative carriers include self-insurance, captive insurance, risk-retention groups, finite risk reinsurance and capital market alternatives.