Solution 2 :Definition of insurance contract An insurance contract is a "contract under which one party (the insurer) accepts significant

t insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder."

The Risk Management Process :Risk is the ultimate four-letter word of business, investment and government. Entrepreneurs and political leaders understand as well as anyone that if nothing is ventured, nothing can be gained, and that therefore risk can never be entirely eliminated. Nonetheless, the effort to minimize, or at least manage risk, has become a major focus of most corporate entities, and it's standard practice for public companies to disclose their operating risks each quarter in their public filings. Businesses face many risks, therefore risk management should be a central part of any business' strategic management. Risk management helps you to identify and address the risks facing your business and in doing so increase the likelihood of successfully achieving your businesses objectives. A risk management process involves:

methodically identifying the risks surrounding your business activities assessing the likelihood of an event occurring understanding how to respond to these events

putting systems in place to deal with the consequences monitoring the effectiveness of your risk management approaches and controls

As a result, the process of risk management:

improves decision-making, planning and prioritisation helps you allocate capital and resources more efficiently allows you to anticipate what may go wrong, minimising the amount of fire-fighting you have to do or, in a worst-case scenario, preventing a disaster or serious financial loss significantly improves the probability that you will deliver your business plan on time and to budget

Risk management becomes even more important if your business decides to try something new, for example launch a new product or enter new markets. Competitors following you into these markets, or breakthroughs in technology which make your product redundant, are two risks you may want to consider in cases such as these. When all the information is available to the risk manager, it will be cumbersome for the risk manager to clearly identify that where the risk lies. If the wrong risk has been identified then all the practice of having the risk management process will be wasted. This is the challenge for the risk manager to extract out the useful and the best information from the available information and then shape the information in such a way, that it useful in identifying the risk. Risk manager should also make sure that the information he acquires is from a trusted source, wrong information will lead to a wrong risk management process. There are various techniques which are used to identify the risk, to decide which technique to use will depend upon certain questions:1- What are the risks involved? 2- What could happen? 3- When will it happen? 4- What would be the impact of that risk if there is worst case scenario? 5- Where do the risk lies? 6- How can the risk information be shaped for making any key decisions? 7- How could the people and organization be affected by the risk? These are the key questions which have to be kept in mind before selecting and applying any technique of risk management. Following are few major techniques of risk management:1- Flow Chart 2- Organizational Chart 3- Questionnaires 4- Physical Risk Inspection 5- Fault tress. 6- Hazop Study. 7- Safe Guards

8- Business Impact Analysis 9- Credibility Test also known as qualit