I. Risk and Insurance 風險及保險

Risk is uncertainty about whether a loss will occur, when it will occur and how large it will be. Candidates must tell perils apart from hazards, know the main classifications (financial and non-financial, pure and speculative, fundamental and particular), and understand how risk is managed by identifying, evaluating and controlling it through avoidance, reduction, retention or transfer.

Meaning of Risk · Classification of Risk · Risk Management

The primary function of insurance is risk transfer: the insured pays a small, certain premium and the insurer takes on an uncertain and possibly large loss. The insurer pools the premiums of many insureds into a common pool and charges each an equitable premium for the risk they bring, which benefits individuals, businesses and society as a whole.