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Risk Management

from small sets of observed values to larger sets of values
is known as statistical inference.

More formally, statistical inference involves the use of a
smaller set of observed values, known as a sample, to
make predictions about a larger set of unobserved values,
known as the population.

A sample, can be the number of fire losses sustained, or
likely to be sustained by the firm over a much longer
period, It is important when making interferences beyond
a particular set of data that the sample is in fact
representative of the wider population, which it wishes
to investigate.

(d) Contingency funds - The contingency fund should be
strictly adhered to. There should not be any withdrawal
or transfer of money from the fund. It should be noted
that all guidelines are followed keeping in mind all probable
and unexpected losses. The fund transfer or withdrawal
should be an absolute no-no and several financial
consultants should handle the fund to reap in maximum
financial returns. The financing of the fund solely from
the contributions based on loss expectancies involve the

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