chp1

• Certainty


  A situation where an outcome is sure to happen
• Uncertainty


  A situation where the outcome cannot be determined with accuracy
• Loss


  A reduction in value that can be measured in monetary terms
• Risk


  A factor, thing, element, or course involving uncertain danger
• Risk


  An uncertainty about financial loss from an exposure
• Risk


  A situation of uncertain possible outcomes
• Since risk relates to a probable loss, there is a cost associated with risk
• Loss


  Financial impact
• Risk


  Uncertainty associated with loss
• Peril


  Cause of loss
• Hazard


  Condition that can increase the chance of loss (physical, moral, morale and legal)
• Hazard, peril & loss


  Relationship between them
• Physical hazard


  • Physical condition that increases the possibility of a loss
• Moral hazard


  • Character defect in an individual that increases the chance of loss
• Morale hazard


  • Attitudinal defect in an individual that increases the chance of loss with the knowledge that insurance exists
• Legal hazard


  • Characteristics of the legal system or regulatory environment that increases the frequency or severity of losses
• Risk (ghurm) in Islamic terms

  Implies two types of risks: market risk and financial risk
• Losses in the context of Islamic Insurance

  Depreciation or loss in economic value of an asset
• Categories of Risk


  • Pure risk
  • Speculative risk
  • Fundamental risk
  • Particular risk

  
• Techniques for Managing Risk in Islam

  • Avoidance
  • Reduction
  • Sharing
  • Retention