Hello
This tiny website is used to summarise part of Chapter 15 from Inside Business. Have fun learning and exploring this website! Other chapter summarises are also linked here, incase you want to check them out. Thanks.
WHAT IS RISK MANAGEMENT?
Risk management is used by business and households. It helps dealing with risks that could affect them financially and health-wise. It involves identifying all possible risks within the space (e.g. fire, personal injury), and calculating the cost of protecting themselves against these risks.
But how do you minimise risks?
Businesses and households can minimise risks in ways such as:
Install security systems: Security risks can be reduced by installing alarms, CCTV cameras and motion-sensor lights.
Training: Everyone should be aware of health and safety procedures, e.g. what to do in the event of a fire, CPR training for a medical emergency. Management may replace or upgrade equipment based on recommendations made by the health and safety officer.
Appoint a health and safety officer: Appointed in the workplace to report safety issues and conduct regular safety inspections. Management may replace or upgrade equipment based on recommendations made by the health and safety officer.
Health and safety: Ensure that employees are aware of health and safety rules, e.g. wearing a hard hat on a construction site. Warning signs should use images, which will be clearly understood by all staff.
Insurance: Take out insurance cover to transfer the risk to an insurance firm in return for paying a premium. The insurance firm will pay for any loss incurred.
WHAT IS INSURANCE? AND ITS TERMS
Insurance is financial protection against potential loss of items. A person or business can decide to take out insurance cover to protect against possible losses after identifying all possible risks within their space. In return for the fee paid by the insured to an insurance company (premium), they receive compensation for any loss suffered.
Insurance is typically taken out as individuals and businesses are highly likely exposed to risks almost every day, e.g a person's car breaks down or a business' premises is damaged by a fire.
| Insurance | Term | Description |
|---|---|---|
| The Forms | Proposal Form | The form you fill in when applying for insurance. |
| The Forms | Claim form | The form you fill in when making a claim. |
| The Documents | Insurance policy | The document you receive when you buy insurance. A legally binding document that must be in writing; setting out the terms and conditions of the policy. |
| The Documents | Renewal notice | This document is sent out before the policy. |
| Other Terms | Insurance premium | The fee paid for insurance, consisting of a basic premium plus any loading or discounts that may apply. |
| Other Terms | Policy excess | When a claim is made by the insured, the first portion of the claim is paid by the insured. |
| Other Terms | Loading | An additional charge on top of the basic premium because of an extra risk that may apply in circumstances such as: a driver with a provisional licence. |
| Other Terms | No claims bonus | A reduction in the premium charged if no claim has been made on the policy since the last renewal date. |
| Other Terms | Day of grace | A short period of time given to the insured to pay the insurance premium. |
| Other Terms | Average clause | This applies in cases of under-insurance. |
PEOPLE IN INSURANCE
| Job Title | Role |
|---|---|
| The insured | The household or business that takes out the insurance policy. |
| The insurer | The insurance firm with which the insured has taken out their insurance policy, e.g. Allianz. |
| Actuary | Calculates the premium to be used by the insured. |
| Assessor | Calculates the amount of compensation to be paid. |
| Loss adjustor | When a loss occurs, the amount of compensation to be paid is decided by the insurance firm. If the insured is unhappy with this amount, an independent person known as a loss adjuster is appointed to assess the situation. The loss adjuster may adjust the amount of compensation. |
| Insurance agent | A person or business who sells insurance on behalf of one insurance business. e.g. an agent for Axa. |
| Insurance broker | A person or business who sells insurance on behalf of a number of different insurance companies. They are paid a commission by the insurance company with which the final policy is taken out, e.g. Chill Insurance. |
OTHER LESSON SUMMARIES
CHAPTER 14
CHAPTER 15
is risk management important?
In my opinion, I believe risk management is heavily important for a business or household to undertake. With a proper risk assessment of the area and space around the premises, risk management can minimize issues, including: personal injury, fire, health risks, financial loss, etc. Risk management allows us to be highly attentive and careful about the risks around us, and without it, may cause harm and damage to the household and businesses itself that can be hard to fix.