Any tragedies or undesirable events always evoke emotions. For example when you see or hear news about a fire in a building, a car crash, a shipwreck, a plane crashed, and so on. Next, the medical teams with ambulance or rescue team move as quickly as possible to the scene of the case.
After all the noise subsides, you are grateful that it did not happen to you. You also sympathize with anyone who suffers losses due to such ill-fated events. Losses like this can actually happen to anyone.
Is the person around the disaster happening lucky? Because they are not affected? In fact, events like this can happen anywhere and anytime. This is called risk.
The risk is a natural state that is always inherent in the life of every human being. The risk is a term that is not difficult to understand. Even though this term has a special connotation when applied to subjects in a particular field of study.
The concept of risk is the main basis of the problem relating to any type of insurance agreement. Although there are some other related concepts that are worthy to be associated with it.
At a glance, the risk is a very simple concept. When you hear someone say to you that the work he is doing has a big risk, then you will start thinking. You will assume that in certain situations there will be uncertainty in which the situation percentage of a bad situation will be greater than the normal situation.
However, the notion of risk is more than just that. The definition above is too loose which caused a lot of people who imply a lack of knowledge regarding the future. In the worst situations, this will only be satisfactory during a conversation when it comes to risk. Thus, to increase your knowledge and understanding of insurance, a deeper and more detailed definition of risk should be recognized.
The Definition Of The Concept Of Risk Is Different For Each Field
Any investigation of an event is inseparable from the concept of risk. Experts in insurance, statistics, economics and so on have long been exchanging thoughts about the concept of risk. However, they concluded that the risks in these areas differed from one another. Therefore, one definition of risk cannot be applied in all areas.
When a risk is applied to economics or banking it may not mean something as valuable as an analytics tool for insurance practitioners.
How could this have happened? Because each group will treat every possible problem that can occur in accordance with the concept of risk itself. So when the statisticians, economists, business analysts and insurance theories talk about risk, it is something very different from each other.
Because of the complex definition of risk, many insurance experts are trying to borrow a definition of risk used in other areas. The result is a contradiction of conflicting definitions. This happens as long as the article covers this subject from the point of view of the subject of insurance.
Ironically, it turns out the insurance script writers can not or still do not approve of this basic concept.
Definition of Risk for Insurance Businessmen
To simplify the concept of risk, the insurance businessmen use it to know the types of insured peril that can occur in a state or object.
For example, if the object is a car then there is the term car insurance. Risks that can happen are collisions or other accidents. Therefore, insurance companies feel that young or inexperienced drivers have a greater risk.
Another example is property. One of the risks that can happen is
damage due to fire or the occurrence of natural disasters. Such as floods, tornadoes, earthquakes and so forth. The insurance company will determine that the property in the area of frequent natural disasters has a greater degree of risk.
In conclusion, the term risk, in general, is the existence of situations that potentially cause losses that occur due to a certain thing.