Page 268 - RISK Management IC 86

explained by this fact, and group action may be an effective way to
secure more acceptable decisions under uncertainty. This conclusion
supports the position that increasing risk aversion in society has
brought about increased use of committees that are able to produce
decisions on risky matters with greater facility than individual
managers.

Risk and religion :
Several aspects of religion may be described in terms of their risk
dimensions. Empirical evidence supports the hypothesis that
increasing concern with religions value reflects greater concern in
society with subjective risk.

Risk and science :
Science advances knowledge, and presumably anything that advances
knowledge tends to reduce subjective risk. Yet as science advances,
new doors to new unknown are opened, thus, creating a new chain of
uncertainties. However, the net effect of scientific advances is very
likely to reduce subjective risk feeling by increasing one’s confidence
in the eventual solution of future problems. The potential effect of
science on the insurance industry are profound.

Risk avoidance :
Any measure which reduces to zero the probability of a loss from a
given exposure may be properly classified as risk avoidance. Risk
avoidance may be achieved by either abandoning or never undertaking
an asset or activity which involves the loss exposure being avoided.
(By some authorities, risk avoidance is also called ‘risk elimination’
because risk avoidance eliminates entirely a given exposure to loss.)

Risk control :
Risk control measures attack risk by lowering the chance that a loss
will occur or by reducing its severity if it does occur.

Risk control alternatives :
(a) Risk avoidance : To completely eliminate the chance of a particular
type of loss ;

(b) Loss prevention : To reduce (but not totally eliminate) the chance
of a given loss ;

(c) Loss reduction : To reduce the severity of those losses which do
occur ;

(d) Separation or diversification of loss exposure : To reduce
concentrations of value subject to a single accident and to make
aggregate losses more predictable ;

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