Page 20 - Ebook IC S01

Survey And Loss Assessment IC-S01

Risk only means that there is some possibility of loss or damage. The damage may

or may not happen. For example in case of earthquake all the buildings may not

suffer loss. Only old buildings having weak structures may suffer damage.

Insurance is done against the possibility of the probable damage that may happen

Risk must be uncertain otherwise it is not insurable. A certain event cannot be

insured.

Insurance covers only economic consequences. Loss must be measured in terms

of money to be insured

Classification of risk

Risk may be classified as below:-

1. Critical or catastrophic risk

2. Important or unimportant risks

3. Financial and non-financial risks

4. Dynamic and static risks

5. Fundamental and particular risk

6. Pure and speculative risk

Critical or catastrophic risks are those risks whose impact is huge and it may lead

to bankruptcy of the owner of the asset. In this case the whole asset is destroyed

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