Question

Define risk management and write about its need. Also write about techniques of risk management, specially Insurance.

Answer 1

Risk management is one of the important concept in finance. As finance involves money and is the backbone for every organisation. The money needs lots of efforts to generate. So, in orde to save the hard earned money one has to manage the risk of losing it. Funds is very important for an individual and the organisation. Both should save it in order to prosper. Tey need to involve in risk measures so that they can save thier funds. There may be several techniques such as decision trees, probability setting,etc. In financial organisation, the use of derivative ensures a high risk management. The variuos types of derivative such as forward, futures, option, etc acts as risk managing techniques. The insurance happens to be one of the risker avenues so that risk should be managed efficiently. The sharing of risk between several organisations or parties can be an example of risk management techniques in insurance.