Chapter one

-Risk -
Risk: uncertainty as to loss which is related to the economic result of
our decisions ….

So the decision maker worries about the outcome of his decision

Probability :there are 3 cases

1-probability (x)=0 no risk "uncertainty" means that we are certain

that the event will not occur

2- Probability (x)= 1 or 100% no risk "certainty" means that we are

certain that the event will occur

3- 0< probability (x) < 1 there is a risk "means that we are uncertain
that the event will occur or not

Define accident (event) :is defined as the physical verification of risk

Define loss: is defined as the decreasing of assets value totally or

partially resulting from accident

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Risk Classifications Risks are divided into many types as
follows:
• Economic risk: The economic risk has material consequences when
verified.

• Non Economic risk: The non economic risk has not material
consequences when verified, It has moral consequences only.

We are interested in Economic risks only. So It is divided into 2 types:

1. Speculative risks: this type has 3 characteristics:

-Decision maker create this type when he makes his decision.

-The consequences of this type is loss or profit.

-All businesses are as domain of applications. Except insurance.

1. Pure Or Natural risks: This type has 3 characteristics:

-Decision maker has not any intervention to create this type. It is

created accidentally,

-The consequences of this type is loss only.

-Risk management and Insurance are as domain of applications.

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Perils: they are defined as the causes of risks. Perils represent the
environment to create risks and help to increase consequences.

Perils are classified 4 factors such as:

1. Natural factor.

2. Environmental and social factors

3. Objective Factor.

4. Personal Factor. This type has 2 sources

• Intervention of human being behaviors.

• Involuntary human being intervention

The insurance goals

1-capacity of healthy life.

2-capacity of our many prosperities.

First: capacity of healthy life Second: capacity of prosperities.

makes income ‫الحياه الصحيحة تحقق‬
‫الدخل وتساعد في زيادته‬
but there are five reasons make but There are some reasons
healthy life stop: makes stops:
: ‫لكن هناك أسباب التوافق الحياه الصحيحه‬
-thief
- death ‫الموت‬
- fire
- retirement ‫التقاعد‬

-Disease ‫المرض‬
- sinking

- work injuries ‫اصابات العمل‬

-Unemployment ‫البطاله‬

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