Page 206 - RISK Management IC 86

Risk Management

prevention would be (a) direct premium reductions (b)
government and other grants.

Indirect benefits of loss prevention are : (a) reduction in
probability/size of uninsured/uninsurable losses , from
amongst property losses, liability losses, personnel losses
and business interruption losses. (b) Contingent
reductions in premiums for experience rated policies.
(c) Spin off benefits in terms of productivity, labour
relations, public relations.

Q4. (b) (i) Give examples of risk avoidance
measures.

(ii) Identify the costs of risk avoidance

Ans. (i) Risk avoidance involves abandoning some activity,
or performing tasks in another way, or at a different
location, etc. any attempt to make such changes to
an existing operations involves major inconvenience
or disruption to the business and substantial expense.

For e.g, it may be possible to produce a particular
product using two different methods, A and B. A
may be cheaper than B but subject to additional risk.
Once plant A has been installed the cost of changing

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