ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Accepting the consequences of risk by self-insuring to absorb the loss. Ex: To help cushion your financial burden, you could establish a monetary find to cover the cost os a loss. Under the policy, the insurer agrees to assume an identified risk for a fee.

Detailed explanation-2: -Risk mitigation Risk mitigation involves limiting the consequences of a risk to deal with as it occurs. The strategy is commonly achieved through hedging.

Detailed explanation-3: -Self-insure is a risk management technique in which a company or individual sets aside a pool of money to be used to remedy an unexpected loss.

Detailed explanation-4: -Loss Prevention and Reduction This method of risk management attempts to minimize the loss, rather than completely eliminate it. While accepting the risk, it stays focused on keeping the loss contained and preventing it from spreading. An example of this in health insurance is preventative care.

Detailed explanation-5: -Purchasing insurance is a way to reduce the financial impact of a business interruption, loss or damage to a facility or equipment. Insurance companies provide coverage for property damage, business interruption, workers’ compensation, general liability, automobile liability and many other losses.