MANAGEMENT

Detailed explanation-1: -The theory of probability (also known as probability theory or theoretical probability) is a statistical method used to predict the likelihood of a future outcome. This method is used by insurance companies as a basis for crafting a policy or arriving at a premium rate.

Detailed explanation-2: -Everyday many individuals, organizations, governments, and businesses buy insurance to transfer the risk of facing an uncertain loss in exchange for paying a certain premium. This mechanism has been used for centuries, reducing the uncertainty of financial loss by spreading risk across a large number of the insured.

Detailed explanation-3: -Risk: Uncertainty arising from the possible occurrence of given events that would result in loss with no opportunity for gain.

Detailed explanation-4: -Risk takes on many forms but is broadly categorized as the chance an outcome or investment’s actual gain will differ from the expected outcome or return. Risk includes the possibility of losing some or all of an investment.