Types of Risk Burden

• Primary Burden of Risk

Consists of  losses that are actually suffered by households as a result of pure risk events. These  losses are often direct & easily measurable.

• Secondary Burden of Risk

Consists  of costs and strians that one has to bear merely from the fact that one is exposed to loss situation. Even if the event does not occur, these burdens have still to  be borne.

Risk Management Techniques:

• Risk Avoidance
• Controlling risk by avoiding a loss situation
• Risk Retention
• Retaining or handling risks on your own known as Self insurance
• Risk retention and control
• Means taking steps to lower the chance of occurence of loss and to reduce severity of its impact if such loss should occur

Loss Prevention  

Measures to reduce chance of occurence

Loss Reduction 

Measures to reduce degree of loss

Risk retention thro Self financing 

           Involves self payment for any losses as they occur

Risk Transfer 

•               Transfer the risk to someone who can handle it
•                Insurance is a risk transfer mechanism