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Disadvantages Of Household Risk Management

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Household is those who live under a same house and compose a family while risk is a probability or threat of loss, injury, damage or any other negative occurrence that is caused by any weakness or carelessness. Household risk management is the households’ insurance against unexpected lost of income, financial needs and assets.

There are two types of risks which is pure risk or insurable risk and the another one is speculative risk. There are three components of pure risk which is personal risks, property risks and liability risks. Personal risks is the exposure to financial loss or the additional expenses due to premature death or disability. As a result of death or disability of a person who earns income, financial lost may be incurred leaving a family or a business financially insecure. Next, property risks is the uncertainties of direct or indirect losses to personal or real property due to fire, theft, accident or any other hazards while liability risk involves the possible losses as a consequences of carelessness or property damage to others. For the speculative risks, it is a category of risks that might give a result either profit or loss. All speculative risks is undertaken as a result of a conscious choice.

Household risk management is the best way to protect or to overcome unexpected risk that we could faced anytime. Insurance is known as a financial risk management tool that will protect the insured from unexpected risks. Insurance is defined as a contract of

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