Risk Management: The process of making and implementing decisions to handle loss exposures.
Individuals, Families and Organizations face loss exposures every day. Some of them can be retained but some of them may lead to serious financial consequences. Few loss exposures can be controlled by Loss Prevention Measures such as safety goggles and helmets for construction workers to reduce the frequency of injuries and few may be controlled by Loss Reduction Measures such as placement of fire extinguisher in the home or workplace to reduce the severity of fire loss.
Some of the loss exposures are neither easy to retain nor avoid nor control, in this case the best risk management technique to overcome these kind of uncertain losses would be To Transfer the costs of losses to another party (Insurer).