Pakistan study notes for Matric, Intermediate, B.A, B.COM BSC, M.A, BCS. Free Pakistani Urdu educational school, colleges and University notes.

PROTECTION AGAINST RISKS/ METHODS OF REDUCING RISKS

PROTECTION AGAINST RISKS/ METHODS OF

REDUCING RISKS

Some methods have been evolved to provide complete or partial protection against some risks.

 

1. Safety Arrangement / Aversion of Risk Resources:

Safety arrangements are made to protect company assets. Fire fighting devices, internal auditing and control, and electronic safes and vaults provide safety against risks. Regular exercise and proper diet and regime jeep from fatal diseases Proper market research ensures the success of a new product.

 

2. Shifting the Risk

This is the most common method of providing safety against the risk. Shining the risks refers to the method of getting insured with an insurance company at a regular premium payment.

 

3. Self Insurance

Large business concerns make their own safety arrangements, against various risks, as fire. Since the companies may have many branches, outlets or factories, their own insurance system involves less cost than that of premium paid to the insurance company. InKarachi, all, banks provide safety to the cash at their branches by placing armed guards.

4. Advance Knowledge of Risk

One way to avert risks is its recognition or advance knowledge. Medical checkup, saving up money for future, providing fire extinguishers, are devices to minimize risks.

 

5. Aversion of Risk through Flexibility

Through introducing flexibilities risks can be brought down as under.

a)         Business policies of the company should be flexible.

b)         The company should introduce two or more products to diversify risks.

c)         All officers of a company should not travel together in the airplane. The queen and her successor of England, for instance, cannot travel together in the same airplane.

 

 

The process of insurance involves two parties:

(i)         The insurer

(ii)        The insured

 

The understanding between the insurer and’the insured necessitates that the former provide protection and the latter pay premium in return. This understanding is known as insurance.

 

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