“Risk comes from not knowing what you are doing. By having insurance policy your mind and heart can be free from what-ifs of life”

“Risk comes from not knowing what you are doing. By having insurance policy your mind and heart can be free from what-ifs of life”

Business Risk and Insurance

Nature of business risks:

Risk is an essential feature of business. Business risk may be defined as the danger of loss from unforeseeable event in future. It implies the possibility of loss due to some unpredictable and unfavorable happening in future. “Risk implies uncertainty about the future course of events. There is a chance of loss from the day goods are produced in anticipation of demand until they are sold and the payment is received”. Goods may decrease in value due to a fall in the market price or because of a change in fashion. Fire, flood storm or earthquake, may destroy the goods or a business may not be able to sell all the goods due to keen competition. Bad debts, theft, embezzlement, accident and death etc. may also result in loss. Thus there is an element of risk at every stage of business.

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Insurance:

Insurance is a contract between two parties in which one party promises the other party to compensate or reimburse the insured amount in case of loss to his life, goods or property. The contract of compensating any loss is called insurance. In economics, the process of collecting money to avoid the risk is also called insurance. Every person faces different types of risks in modern era. These risks may be to his life assets and business. So, the insurance is used as a shield to avoid risks and compensate the losses. The documents used for the contract of insurance are called insurance policy.