The most valuable financial asset of most people is an ability to generate income. If this ability were disrupted, the opportunity to create an adequate living estate would be severely jeopardized. Most people need protection in this area until sufficient assets have been acquired to produce the income required to provide for their needs in the event of disability. Once these assets are sufficient, disability insurance becomes less of a necessity. Risk Management Definition of Risk Risk may be defined as the uncertainty or lack of predictability of losing something of value.
Undiscovered risks are potential losses.
The risk of a relatively large and perhaps devastating economic loss creates a need for an organized and comprehensive plan of risk management. The process by which potential losses are systematically and continuously identified and relative importance is evaluated. Risk control - Minimizing losses to assets and income by curtailing risk whenever and wherever possible. Deductibles and excess plans are examples of risk retention. Risk transfer - This is normally accomplished through an insurance contractwhereby an insurance company accepts the undetermined potential risk in exchange for a specific and known payment of a premium.