Global perspectives on Risk

Running head: GLOBAL PERSPECTIVES ON RISK
Global perspectives on Risk
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Global perspectives on Risk
Introduction
Risks or uncertainties are major challenges to business entities, individuals, global markets, and institutions. A lot of business organizations have been exposed to certain risk factors making it hard or inappropriate for them to prosper in global markets. To deal with the problem appropriately it has become of essence for different entities and individuals to come up with measures necessary to curb such problems for prosperity. The global markets consider it necessary for business entities to come up with strategies necessary to keep organizations, businesses, and institutions competitive. Insurance is one of the major important strategies considered by global markets, organizations, and institutions. However, insurance and insurance markets that deal with risks are said to be problematic. Despite various problems associated with such institutions, global or international markets consider it appropriate to use insurance as an important part of risk financing strategy. To critically evaluate this particular area of concern adequately it is important to understand the meaning of risk and insurance.
Carris, 1995 p 324 asserts that, a risk in respect to business refers to certain circumstances which have negative impact in relation to operation of an organization, business entity or institution. A business risk results due to internal factors as well as external conditions. The major outstanding risk influenced by external factor is change of demand for goods and services. It is hard to deal with external factors as they occur due to forces of demand and supply in the wider market. Internal factors on the other hand, result due to development of various measures that lead to expansion of business by an investor.
Internal conditions that result to a business can be identified and corrected in an efficient manner. A business risk thus means to the probability of loss which is inherent in a firm’s operation and its environment. Major considerations in this respect refer to competition, natural disasters, or adverse economic conditions. These conditions are usually very uncertain in that they impair the ability of an entity to get returns on its investment. In the wide global perspective it is important to note that entities are entitled to come up with the necessary measures that promote its survival in the competitive world of uncertainties. According to Kasperson, 2001 pp78, the main categories of business risk include strategic, financial, operational, and compliance.
The most critical issue in relation to business operation is the aspect of developing various mechanisms through which the risks can be dealt with effectively. Through consideration of insurance policies it has become of essence for organizations to take up insurance cover in the wide scop...