Peril And Hazard Analysis

Peril and Hazard

A peril is defined as the cause of the loss. For examples of perils which are fire, flood, in an auto accident and robbery.

A hazard is a condition that increases the chance of loss. There are many types of hazard;

a. Physical hazards are physical conditions that increase the chance of loss (icy roads, defective wiring)

b. Moral hazard is dishonesty or character defects in an individual, that increase the chance of loss (faking accidents, inflating claim amounts)

c. Attitudinal Hazard (Morale Hazard) is carelessness or indifference to a loss, which increases the frequency or severity of a loss (leaving keys in an unlocked car)

d. Legal Hazard refers to characteristics of the legal system or regulatory environment that increase the chance of loss (large damage awards in liability lawsuits)

Risk Management

Risk management process involves several key steps:

i. Identify all significant risks. ii. Evaluate the potential frequency and severity of losses.

iii.

Loss control or risk control keeps away from perplexity between activities that reduce the normal cost of losses and activities that reduce the risk like inward risk reduction. Numerous kind of loss control impact both the frequency and severity of losses and can't be promptly delegated either loss prevention or loss reduction. There are two general ways to deal with loss control firstly is to diminishing the level of risky action. For instance, by reducing creation of unsafe items or moving regard for less risky product offerings. This system is called risk avoidance. Also, to expanding safeguards against loss for activities that is attempted. This methodology is to make the movement more secure and along these lines reduce the frequency as well as severity of losses. Expanded safety measures as a rule include direct consumption or other