Insurance as Part of Risk Management

The world is never free from uncertain loss. Risk management is needed as it is the practice of controlling and appraising risk. Risk management now has evolved as a discrete field of learning as well as practice. In economic and law, risk management should be done well in every aspect of lives including business. In fact insurance is part of risk management that mainly used to hedge against the risk against such uncertain loss. Therefore, it has definition as the equitable transfer of the loss risk, in exchange for payment, from an entity to another one. As the consequence, an insurer will be any company that sells the insurance while the insured is the one or entity that buys the policy. A rate is used as a factor to measure the amount to be charged for particular coverage. That amount is also called the premium. We can imagine that the transaction will include the insured that assumes a known and guaranteed to the insurer a relatively small loss in the form of payment. That is as the return for the insurer’s promise t give compensation to the insured when the case of financial or personal loss happens. Insurance policy is what the contract that the insured receives containing detail of circumstances and conditions in which the insured will get financial compensation.