These techniques range from carrying a talisman or a lucky dollar to fortune tellers and star readers and ultimately to the multinational financial behemoths of insurance companies. Most business in the past centuries have transformed some of their risks to insurance companies in exchange for a premium. Insurance companies in their search for more business and more profits have hired agents and brokers to sell more of their products to more clients in exchange for a sizeable commission. It is only when business owners realized that the coast of this distribution system and its inherent conflict of interest did not work to their advantage that the discipline of risk management came into its own right. The conflict of interest comes from the fact that agents and brokers are paid by the insurance companies to produce sales. Consequently they only solve risk problems through more insurance sales and then only solve those that are problems. that fit the available products of the insurance company ( ies ) they represent. Risk management as a discipline is an objective look at all the risks a business faces, evaluating them, prioritizing them and solving them . For example providing protective footwear to your employees may be a much more practical and cost effective manner to solve your problem than buying insurance for such risk.
With this realization and the ever increasing demands from better educate consumers and employees the business brought the management of their risk In house. They hired and trained professionals who were on the payroll of the company rather than commission driven marketing people to handle all aspects of their risks. When the broker industry saw their business disappear they reacted by consolidating ferociously and repositioning themselves very often as risk consultants A professional risk manager should be completely independent from the insurance industry in order to be able to provide advice and solutions which are in the best interest of those they serve. This can be obtained by either bringing the service In house or hiring consultants on a fee for service basis. Any risk manager worth their “Cup Of Tea” should be able to earth this fee back for their employer client in a short time by improved protection and lower insurance costs. The risk and insurance management Society based in New York is one of the most prestigious international organizations in this field advocating the above principles. It celebrated its 50th Anniversary this year. Their annual convention gathers some 15,000 people active in the international risk management business.
DEFINATION OF RISK MANAGEMENT: (1) CUMBRIA COUNTY COUNCIL: “Risk management is a continuous process involving there current cycle of identifying hazards and that lead to the risks occuring analyzing the risk of an event and its profiling the risk in a respect of likelihood and impact controlling the risk through action planning outcomes and monitoring the effectiveness of the control measures. (ESSENTIALS OF RISK MANAGEMENT: The above definitions have brought to light a few essentials of an effective risk management . They are as a following: (1) Risk must be identified before they can be measured and only after their impact has been evaluated can we decide on the most effective method of control. (2) The method of risk control should be economic . There are is no in spending Rs. 1,00,000 to control a risk which can only cost rs. 50,000, There will always be a point where spending on risk control has to stop, (3) The assets of the organization can be physical or human they are both important and risk management must be seen to have a part to play in a both . However risks do not strike at a sets but also play earning capacity of the enterprise. (4) The principle of risk management are just as applicable in the services sector as they are in the manufacturing sector
and are of the equal importance in the public and private sectors of the economy.
BENEFITS OFRISK MANAGEMENT: The following are some of the key gains from risk management “ (1) Reduces losses and costs due to risks. (2) Helps in anticipating problems before they impact a business . (3) Enhance profits. (4) Eases out uncertainty by proactive systematic methods. (5) Ensures stability and target achievements. (6) Avoids litigation by taking preventive steps. (7) Improves efficiency in the organizations by weeding out unplanned events and consequent loss of time and money. (8) Improves decision making by understanding and systematic study of volatility and the opportunities there from. RISK MANAGEMENT PROCESS: The process risk management can be broken into five steps, namely: (1) Setting the objectives of risk management . (2) Risk Identification. (3( Risk Impact analysis-evaluation or estimation (4) Risk Strategy
(a) Risk Reduction and avoidance. (b) Risk transfer. ( C ) Risk retention
With this realization and the ever increasing demands from better educate consumers and employees the business brought the management of their risk In house. They hired and trained professionals who were on the payroll of the company rather than commission driven marketing people to handle all aspects of their risks. When the broker industry saw their business disappear they reacted by consolidating ferociously and repositioning themselves very often as risk consultants A professional risk manager should be completely independent from the insurance industry in order to be able to provide advice and solutions which are in the best interest of those they serve. This can be obtained by either bringing the service In house or hiring consultants on a fee for service basis. Any risk manager worth their “Cup Of Tea” should be able to earth this fee back for their employer client in a short time by improved protection and lower insurance costs. The risk and insurance management Society based in New York is one of the most prestigious international organizations in this field advocating the above principles. It celebrated its 50th Anniversary this year. Their annual convention gathers some 15,000 people active in the international risk management business.
DEFINATION OF RISK MANAGEMENT: (1) CUMBRIA COUNTY COUNCIL: “Risk management is a continuous process involving there current cycle of identifying hazards and that lead to the risks occuring analyzing the risk of an event and its profiling the risk in a respect of likelihood and impact controlling the risk through action planning outcomes and monitoring the effectiveness of the control measures. (ESSENTIALS OF RISK MANAGEMENT: The above definitions have brought to light a few essentials of an effective risk management . They are as a following: (1) Risk must be identified before they can be measured and only after their impact has been evaluated can we decide on the most effective method of control. (2) The method of risk control should be economic . There are is no in spending Rs. 1,00,000 to control a risk which can only cost rs. 50,000, There will always be a point where spending on risk control has to stop, (3) The assets of the organization can be physical or human they are both important and risk management must be seen to have a part to play in a both . However risks do not strike at a sets but also play earning capacity of the enterprise. (4) The principle of risk management are just as applicable in the services sector as they are in the manufacturing sector
and are of the equal importance in the public and private sectors of the economy.
(a) Risk Reduction and avoidance. (b) Risk transfer. ( C ) Risk retention