Answer :
Final answer:
Risk management involves identifying and implementing measures to reduce risk, with insurance playing a crucial role in providing protection and aiding business stability and growth.
Explanation:
Risk management is the practice of identifying and implementing measures to reduce risk to a tolerable level. Insurance plays a vital role in risk management by offering protection against unexpected events, helping to maintain stability, and fostering business development.
One key aspect of insurance is that insurance companies take on individuals' or businesses' risks for a fee known as a premium, thereby safeguarding wealth and income against unforeseen circumstances.
Another crucial concept in risk management is risk spreading, where risks are distributed among multiple insurers to prevent catastrophic financial losses in the event of a large-scale disaster, ensuring that coverage is available for various risks.
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