Registration Form

The following factors constitute some problems inherent in management of personal risks compared with the management of corporate risks.

i) Religious consideration which deter so many people in taking assurance policies.

ii) Poverty which afflict billions of people around the world.

iii) Ignorance on the part of some individuals who are stack illiterates.

iv) Neglect by some individuals in taking insurance policies for their property.

v) Low level of development of the insurance industry particularly in the third world countries.

vi) Disillusion on the part of those individuals who took assurance policies in the past and only met poor treatment by insurance companies.

vii) Loss of interest in assurance policies as a result of loss of funds by some individuals to insurance companies in the past.

viii) The consideration that financial compensation can never be complete substitute for life lost from death.

ix) Inadequate compensation on personal injury or infirmity.

x) Frustration experienced by individuals in claiming compensation on loss of property.

4.0 CONCLUSION

You have understood from the discussion in this study unit that for effective management of corporate risks, there are basic methods that must be employed. Such essential methods include risk avoidance, risk reduction, risk retention, and risk transfer.

Human beings like organizations also have to contend with some personal risks, which include death, sickness, injury, infirmity, paralysis; loss of breadwinner; damage to personal property; and liability due to damage to other people‟s property, among others.

In treatment of personal risks, the same techniques which are available to corporate entities can also be employed by individuals. Nevertheless, there are some problems which may preclude some individuals from apply any of the techniques for managing their personal risks.

5.0 SUMMARY

In this study unit, topics covered include the following:

 Techniques of Managing Corporate Risks

  Risk Avoidance

  Risk Reduction

  Risk Retention

  Risk Transfer

  Different Types of Personal Risk

  Process of Managing Personal Risks

  Problems in Managing Personal Risks

In the next unit, you will be taken through the discussion on agents of risk management.

6.0 TUTOR-MARKED ASSIGNMENT

Mention and explain the problems involved in managing personal risks.

Solution to Self Assessment Exercises SAE 1:

The reasons which may necessitate the retention of risk by corporate organizations are as stated below.

 Ignorance,

  Lack of knowledge,

  Inability to reach the right decision,

  Laziness,

  Indifference or lack of thought,

  The risk involved is too minor or inexpensive.

  A major risk may require commitment of huge financial outlay which can be financed by the organizations.

SAE 2:

The potential risks to which an individual is exposed in life are stated below.

 Death;

  Sickness;

  Injury;

  Infirmity;

  Loss of Limb or other part of the body;

  Paralysis;

  Loss of breadwinner;

  Loss of or damage to personal property;

  Liability due to damage to other people‟s property;

  Liability to compensate others for personal injury; and

  Liability for infringement on intangible property of others.

SAE 3:

The circumstances or events that expose human beings to some forms of risk in life include the following:

 All basic events causing deterioration in welfare;



 All other events that may frustrate the fulfillment of one‟s future welfare plans;

  Personal circumstances which inevitably change over time;

  Increased responsibility towards large family;

  Responsibility towards extended family members;

  Responsibility towards in-laws from marriage;

  Increase in children‟s welfare due to grave unemployment situation; and

  Enlarge role and responsibilities in the society.

SAE 4:

The methods of handling personal risks by individuals are highlighted below.

a) Risk Avoidance b) Risk Reduction c) Risk Retention d) Risk Transfer

7.0 REFERENCES/FURTHER READINGS

Adekunle, H. (1995). “Risk Management Practice and Insurance Surveying “ NICON Risk Management and Survey Co. Ltd, September.

Bickechaupt, D. (1974). General Insurance, 9^th Ed, Illinois: Richard D.

Chilellezi, O. (2006). Risk Management for Insurance Practice, Lagos: Inter Training and Education Services.

Kpodo, Patrick (1989) Risk Management in a Developing Economy”, Paper Presented At the National Conference on Risk Management (FARIM) at The Nike Lake Hotel, Enugu, 19^th – 23^rd March. 1989.

Ogunlana, F.O. (1995). “The Role of Insurance in Risk Management”, the Nigerian Insurer, Journal of the Nigerian Insurers Association (NIA), No. 3, June.

Oluoma, R. O. (1999). Elements of Insurance, Ikeja: Impressed Publishers.

Pritchet, S.T. et al (1996). Risk Management and Insurance, 7^th Ed., New York: West Publishing Company.

Skipper Jr., H. D. (1987). The Promotion of Risk Management in

Developing Countries, a Report prepared for UNCTAD, Centre for Risk Management and Insurance Research, College Of Business Administration, Georgia State University, TD/B/C.218, 14^th October.

Trieschmann, J.S., Gustavson, S.G. and Hoyt, R.E (2001). Risk Management and Insurance, 11^th Ed, Illinois: Spout – Western College Publishing.

Williams, C.A., Smith, M.L. and Young, P.C. (1995). Risk Management and Insurance, 7^th Ed, New York: McGraw-Hill, Inc.

 Further Reading

Kaye, D. (2004). Risk Management, London: Chartered Insurance Institute.