2 Major Principles of Risk Management

The principle of risk management includes top-level involvement, a culture of accountability, risk prevention, appropriate control, discipline, and forecasting negative events. Investment and accountability are important factors in risk management. Let’s know the principles of risk management.


Risk management is embedded in the insurance industry from the date of a proposal to the final payment of claims. After the sale, services reveal the techniques of risk management. It reveals the investment process in Industry itself discovers the principles of risk management.

The senior managers have knowledge of risk and risk management techniques. There is a set procedure e.g., LIC has agents manuals to guide them on how to identify the risk and manage it properly. The  L.I.C. provides oversight integration,  coordination, and consolidation of corporate functions, Many companies have a  separate department of risk management.


The responsibility vested in the executive reduces the risk and forces them to manage risk. There are rating agencies (Tariff Advisory Committee) analysts, surveyors, etc. who evaluate the risk. Management is responsible for identifying the risk setting the risk limits implementing process to back and identify new risks.

Applying constant testing and monitoring. The agents, development officers, and branch managers are responsible for risk evaluation and rate fixation.  They sell the right policy to the right person.

Principles of Risk Management

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