Lecture

Insurance and Reinsurance

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Description

This lecture by the instructor explains how insurance puts a price tag on risk, helps people understand and share risk, and plays a crucial role in disaster risk reduction. It delves into the concepts of trust, insurability, and the importance of chance in risk events. The lecture also covers the role of reinsurance in diversifying risk and providing capital at a lower cost, especially in the face of natural catastrophes. It emphasizes the need for trust, early warning systems, and effective city planning to mitigate risks and save lives, before considering insurance mechanisms to share remaining risks within and across communities.

In MOOC

A Resilient Future: Science and Technology for Disaster Risk Reduction

This course aims to introduce participants to existing and emerging technologies suitable for disaster risk reduction while promoting the overall aim of sustainable development. The course focuses on three main natural hazards- floods, landslides and earthquakes. It also discusses the challenges and limits of adapting and adopting technologies depending on context (Global North and Global South) with examples from Switzerland, Nepal, Colombia, Philippines and other countries.

Official source

Ontological neighbourhood

Business

Business administration: Risk management

Related concepts (30)

Risk management

Risk management is the identification, evaluation, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives) followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities.

Insurance

Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss. An entity which provides insurance is known as an insurer, insurance company, insurance carrier, or underwriter. A person or entity who buys insurance is known as a policyholder, while a person or entity covered under the policy is called an insured.

Risk assessment

Risk assessment determines possible mishaps, their likelihood and consequences, and the tolerances for such events. The results of this process may be expressed in a quantitative or qualitative fashion. Risk assessment is an inherent part of a broader risk management strategy to help reduce any potential risk-related consequences. More precisely, risk assessment identifies and analyses potential (future) events that may negatively impact individuals, assets, and/or the environment (i.e. hazard analysis).

Reinsurance

Reinsurance is insurance that an insurance company purchases from another insurance company to insulate itself (at least in part) from the risk of a major claims event. With reinsurance, the company passes on ("cedes") some part of its own insurance liabilities to the other insurance company. The company that purchases the reinsurance policy is referred to as the "ceding company" or "cedant". The company issuing the reinsurance policy is referred to as the "reinsurer".

Risk

In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environment), often focusing on negative, undesirable consequences. Many different definitions have been proposed. The international standard definition of risk for common understanding in different applications is "effect of uncertainty on objectives".

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