Page 248 - RISK Management IC 86

Risk Management

occurrence of the chances of loss producing events
or limiting the severity of the losses. Here one is to
identify the conditions that bring about loss producing
events or increase their severity. The risk manager
has to use his common sense as well as seek technical
expertise from technical experts to develop the control
measures.

(c) Risk financing -risk financing deals with the manner
in which the risks remaining after his control measures
have been implemented, shall be financed. In the long
run the organisation has to pay for its own losses.

So the primary objective of risk financing is to spread
the risk for evenly over time to reduce the financial
strain and possible insolvency which the random
occurrence of large losses may cause. The second
objective is to minimise the risk costs.

Essentially an organization can finance its risk costs
in three ways:
(i) losses may be charged to current operating costs as

and when they occur.

(ii) Prevention may be made for losses either through

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