Page 28 - EBOOK RISK MANAGEMENT

3.2.2 Fundamental and Particular Risks

Fundamental Risk
•Affects the entire economy or large number of
persons, groups, society or population
•Also known as non-diversifiable risks
•Generally non-insurable (policyholder need to
pay extra premium to be covered under
insurance)
•Example: war, unemployement, inflation,
catastrophic event

Particular Risk
•Affects only particular individuals or small
proportion of people
•Also known as diversifiable risks
•Usually insurable
•Example: driving a car, death of breadwinner

Figure 3.2 Fundamental versus Particular Risk

3.3 Types Of Pure Risk

There are four major types of pure risks faced by individuals and businesses.

Personal
Risks

Financial Types of Property
Risks Pure risks Risks

Liability
Risks

Figure 3.3 Types of Pure Risks

19