Observation

Most candidates attempted this question and the performance was poor. Majority of them were unable to define risk management or to explain the stages involved in risk management.

(a) Risk management is an activity which integrates recognition of risk, risk assessment, developing strategies to manage risk and mitigation of risk using managerial resources.

(b) Transfer of risk in insurance: This is a risk management technique whereby risk or loss is transferred to another party through a contract or a professional risk bearer. It may take the form of direct re-insurance, where insurers borrow from off-balance sheet capital in order to reduce the pressure on own risk-bearing capital.

(c) Stages in risk management

(i) Establishing goals and context i.e. the risk environment;

(ii) Identifying risks;

(ii) Analyzing the identifies risks;

(iv) Assessing or evaluating the risks;

(v) Treating or managing the risks;

(vi) Monitoring and reviewing the risk environment regularly;

(vii) Continuously communicating with stakeholders and reporting.