Page 10 - Insurance Surveyors Book Ebook IC S01

Survey And Loss Assessment IC-S01

Risk Attitudes

Risk attitudes can be defined as the ways in which a person behaves in an

uncertain situation and vary from person to person because of their personalities,

economic status, potential gains/ losses. These attitudes fall into one of the

following categories

i. Risk neutral - person reacts with the likelihood of its occurrence

ii. Risk preferer - person welcomes the existence of risk and uncertainty

iii. Risk averter - person normally frightened by risk & does not like to live

with uncertainty

The Cost of Risk

The costs imposed by the existence of risk can be identified in three separate

areas :

Cost of the loss

This includes both direct and indirect costs.

Direct costs being those immediately attributable to the event and indirect

costs being the vice versa.

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