Insurance and Natural Disaster Risks Essay

1855 Words 8 Pages
Insurance is a very important factor to attaining financial capacity in an economy. It is a very difficult concept that requires extensive knowledge of insurable interests, risk assessment and management. This essay seeks to provide an overview of insurance specifically on assessment, measurement and management of both man-made risks and natural disaster risks. The essay further highlights the formulas adopted in measuring man-made risks. In addition, it would provide development and challenges arising out of the use of the risk assessment formulas. Finally, the essay will highlight the difficulty previously arising out of assessing, measuring and managing natural disaster risks. Also, it explains the importance of science and technology …show more content…
However, the insurance cover issued by investors the borrowers managed to transport their goods in easy way. This aspect increased trade freely which might lead to increasing the gross domestic product of nations. Westall (2002) said that since its inception the concept of insurance has been "revolutionized" and is comprehensive enough to meet the need for a wide range of risks manmade or natural risks (Westall 2002). There are two types of risks manmade and natural disaster. A man-made risk means a disaster to the environment that done by man’s actions. This includes, terrorism act, war, automobile or fire risks. It has been said that such risks are highly frequent and less severe in respect to the insurer (Emblemsverg 2008). As a result, a spread of information is available to estimate the likelihood of prospective loss. On the other hand, natural risks are derived from nature. They are less frequent and very severe. Also, the information on the likelihood of loss and occurrence is less. It has been mentioned that this aspect makes it very difficult to cover natural disasters. However, it might be developed as the science and technology has generated solutions to this issue (Emblemsverg, 2008).
Modelling Techniques At first the credit derivatives, share derivatives and rate derivatives moved the market prior to the 1980. After that, risk coverage and awareness

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