The aim of risk management is to preserve the operating effectiveness of an individual, family or organization. This includes both the control of losses and the financing of losses.
Insurance is but one way that losses can be financed.
Back to top 2. Sound risk management involves both the proper control and financing of losses. Safety has to do with controlling losses, and may consist of trying to prevent them, reduce their impact when they happen, or, most likely, both. An example of property loss prevention is correctly storing flammable materials so that a fire will not start. An example of property loss reduction is installing sprinklers to stop a fire so the damage is limited.