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 of 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 technique. There is a set procedure e.g., LIC has agent’s manuals to guide them how to identify the risk and manage it properly. The  L.I.C. provides oversight  integration,  coordination, and  consolidation of corporate  functions, Many  companies  has 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 a right policy to the right person.


Principles of Risk Management

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