Hazards, Perils and RiskWith reference to General Insurance

Par

isth

itiHazard

(Condition)

Kaa

ran

Peril

Cause of Risk and loss

Sam

bhav

na

Risk

Exposure to Hazard

With suppot of peril

HAZARDS

• Existing condition or possible (under current conditions) situation that has the potential to generate a disaster

HAZARDS1. Conflict based – civil war, terrorism, nuclear war, etc.

HAZARDS2. Human systems developed – caused by human activity, infrastructure, transportation, etc.

HAZARDS

3. Natural hazards – naturally occurring phenomena – weather, geological, hydrological, etc.

HAZARDS

• Hurricanes and tornadoes during their seasons

• Earthquakes

• High hazard, poorly maintained dams

• Airlines with poor safety records

• Power production systems with either dangerous technologies or poorly maintained transmission systems

VULNERABILITIES

• Vulnerability is an assessment of how well or how poorly protected you are against an event

• If you have a hazard you may or may not be vulnerable to it

• Live in the flood plain – vulnerable to floods

• Live on high ground – not vulnerable to floods

VULNERABILITIES

• Vulnerabilities may be reduced by mitigation measures (building construction, land use control, maintenance, etc.)

• Or by the level of preparedness you have achieved (well trained and equipped emergency teams, plans, exercises, etc.)

IMPACT

• Assessment of interaction of hazard effects with your vulnerabilities

• Scalar based on the two key variables – hazard strength and vulnerability level

PROBABILITY• A mathematical assessment of how likely it is that a specific event will occur

• Based on a wide variety of factors – history, global warming, infrastructure and demographic changes, new industries, changes in your activities and processes, etc.

Perils

A peril is something that can cause a loss. Examples include falling, crashing your car, fire, wind, hail, lightning, water, volcanic

eruptions, choking, or falling objects

Perils

FIRE….

Lightening….

Explosion

Implosion

RIOT DAMAGE

STFI( Storm Tempest Flood Inundation)

IMPACT DAMAGE

Subsidence and Land Slide

Risk.

Risk is the chance or probability that a person will be harmed or experience an adverse effect if exposed to a hazard. It may also apply to situations with property or equipment loss.

Types Of Risk

Pure risk exists when there is uncertainty as to whether loss will occurNo possibility of gain is presentedonly the potential for loss

Types Of Risk

• Speculative risk exists when there is uncertainty about an event that can produce either a profit or a loss

Types Of Risk

• Fundamental risks affect the entire economy or large numbers of people or groups within the economy.  Examples of fundamental risks are high inflation, unemployment, war, and natural disasters such as earthquakes, hurricanes, tornadoes, and floods

Types Of Risk

• Particular risks are risks that affect only individuals or small group and not the entire community.  Examples of particular risks are burglary, theft, auto accident, dwelling fires.  With particular risks, only individuals experiencelosses, and the rest of the community are left unaffected

Types Of Risk

• Systematic Risk • Unsystematic Risk

Kinds Of RiskProperty risks

Risk that property may be damaged, destroyed or stolen

For example, lightning, tornadoes, hurricanes, explosions, riots, collisions, falling objects, floods, earthquakes, freezing, etc.

Kinds Of Risk

Financial risk Include credit risk, foreign exchange risk, commodity risk, and interest rate risk These risks must be identified and assessed in order for the firm to achieve its business goals

Lets Understand again……RISK AND HAZARD

Thanks for Listening