Non-Financial Risk Definition And Meaning
What Is Non-Financial Risk
There are other situations where measurement is not possible. Take the case of the choice of a new car, or the selection of an item from a restaurant menu. These could be construed as risky situations, not because the outcome will cause financial loss, but because the outcome could be uncomfortable or disliked in some other way. We could even go as far as to say that the great social decisions of life are examples of non-financial risks: the selection of a career, the choice of a marriage partner, having children.
There may or may not be financial implications, but in the main the outcome is not measurable financially but by other, more human, criteria. Insurance is primarily concerned with risks that have a financially measurable outcome. But not all risks are capable of measurement in financial terms. One example of a risk that is difficult to measure financially is the effect of bad publicity on a company - consequently this risk is very difficult to insure.
However, this is a good point to stress how innovative some insurers are in that they are always looking for ways to provide new covers, which the customers want. The difficult part is to be innovative and still make a profit.
What Is Non-Financial Risk
There are other situations where measurement is not possible. Take the case of the choice of a new car, or the selection of an item from a restaurant menu. These could be construed as risky situations, not because the outcome will cause financial loss, but because the outcome could be uncomfortable or disliked in some other way. We could even go as far as to say that the great social decisions of life are examples of non-financial risks: the selection of a career, the choice of a marriage partner, having children.
[Post Image Courtesy of PhasinPhoto at FreeDigitalPhotos.net]
There may or may not be financial implications, but in the main the outcome is not measurable financially but by other, more human, criteria. Insurance is primarily concerned with risks that have a financially measurable outcome. But not all risks are capable of measurement in financial terms. One example of a risk that is difficult to measure financially is the effect of bad publicity on a company - consequently this risk is very difficult to insure.
However, this is a good point to stress how innovative some insurers are in that they are always looking for ways to provide new covers, which the customers want. The difficult part is to be innovative and still make a profit.
Insurance Law And Practice - ICSI
Non-Financial Risk Definition And Meaning
![Non-Financial Risk Definition And Meaning]()
Reviewed by Blog Editor
on
Wednesday, April 19, 2017
Rating:
Posts
No comments:
Do you have any reasonable comments for this post ? Please feel free to drop them below using the comment box. We will moderate and publish them as soon as possible. Cheers !