March 28, 2024

Individuals and business enterprises are exposed to risks on daily basis as they carry out their daily activities. These risks, as they happen, bring about unfortunate consequences into one’s life. For example, in the recent times, we have heard of disasters such as explosion of damaged petroleum pipelines that led to loss of lives and properties, and armed robbery operations that claimed several innocent lives. There have also been airplane crashes that killed many hundreds of lives, and fatal road crashes where several passengers lost their lives. All these are incidents of unexpected disasters.

The possibility that anyone can be involved in one of these events is always there. It is not known to us when it will be our turn to be involved in a road accident or in any unpleasant event. A visit to a hospital tells us already one aspect of many sides of risk. A visit to the law court tell us another risk aspect. Yet man must live. Even there is risk in the food we eat as one can die of poisoned food.

There have also been rampant cases of buildings under construction collapsing, leading to death of several people. A building may be destroyed or damaged by fire or flood, while an employee can sustain injuries at the workplace. Some people have lost their limbs while performing their official duties, resulting in disability, and thereby becoming liabilities to their families.

Management decisions could also affect the operation of an organization negatively which might result to loss of funds. For example, investing in a company that later becomes distressed or production of a new product not fully accepted in the market.

Nations go to war at the risk of losing their sovereignty and national prestige. Professionals are exposed to risk of practice. For example, engineers can suffer from faulty designs while medical doctors can suffer from wrong diagnosis and surgical mishap. A businessman’s option for a particular line of economic endeavour exposes himself to the uncertainties of business life.

The situations highlighted above have shown the inability of man to foresee exactly the outcome of his activities. Omniscience is a quality ascribed only to God. If everyone knows everything, then everyone could be self- assured and there would be no fear of the unknown.

Insurance is therefore intended to reduce the effect of these events by providing alternatives that would ensure continuation of life as if it has not happened. Although in some cases, individuals or business enterprises might experience changes in their activities. For example, an individual riding a Mercedes Benz car may later settle for a smaller car ora company that had four or more weaving machines before may settle for two. These are due to some factors that will later be considered as we progress in the subject.

Insurance, no doubt plays a very crucial role in the social and economic development of a nation. The occurrence of some loss would have rendered many people totally hopeless in the society but the advent of insurance has changed the position. For example, the effect of fire incident would have rendered many people homeless but because of the existence of insurance, such people have been put back on their feet and supported by their insurer. If the risk involved in a business should be considered, many people will prefer to put their money in banks, to investing in business which may later record loss or damage. But the advent of insurance has given hope to many people to continue with their business plans. To successfully link risk with insurance will lead us to the question: what actually is insurance and what does it intend to achieve? Also, what qualities should a risk possess to ensure its acceptance by an insurer, in order to guarantee financial compensation against future losses?

Leave a Reply

Your email address will not be published. Required fields are marked *