An attitude of an individual or organisation with a preference for avoiding risk whenever possible. A risk averter prefers a definite premium, even though it may exceed the loss expectancy, to unknown losses. If the loss expectancy’s monetary amount is £50, a risk averter will pay, say, £75 when the loss possibility range is £0-£5,000.

An informed decision not to become involved with, or continue with, a risk situation. The potential loss is regarded as greater than the potential value of the risk-creating activity, e.g. using PCBs in manufacturing processes, building on flood plains.
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Any measure which reduces to zero the probability of a loss from a given exposure may be property classified as risk avoidance. Risk avoidance may be achieved by either abandoning or never undertaking an asset or activity which involves the loss exposure being avoided. (By some authorities, risk avoidance is also called ‘risk elimination’ because risk avoidance eliminates entirely a given exposure to loss.)

Pensions term describing benefits that are not pre-funded and that are often insured on an annual basis, which usually means death or disability benefits.

Risk financing approach that allows a company to benefit from its own diversification across the different classes of risk, and over time through the use of captives or multiline, multi-year programmes.

Homogeneous groups of risks among whom the losses of the few can be distributed. There is no substantial advantage in two people combining to share each other’s losses, reciprocity excepted. It is only by large homogeneous groups combining through insurance that makes it possible to apply the law of large numbers. Risk combination is at the heart of insurance. The loss lighteth rather easily upon many than heavily upon few’ (Elizabethan Act 1601).

Implementation of risk treatment decisions. Individuals will be made responsible to see that the control measures are implemented and maintained in accordance with agreed timescales. Monitoring risk and their control measures is a vital part of an iterative process.
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Risk control measures attack risk by lowering the chance that a loss will occur or by reducing its severity if it does occur.

Risk reduction techniques that spread risks geographically or by line of business to avoid the problems of risk accumulation or overdependence on a particular class of business. The object is to increase the number of mutually independent risks.

Means risk avoidance.

A process to establish risk management priorities by comparing the level of controllability or other criteria. Risk mapping is a useful tool for prioritising risks by placing them on a risk profile and revealing which threats require management time and resources.

An excess of loss reinsurance contract that is limited to property risks. The reinsured is protected within his overall exposure on an individual risk basis, i.e. the limit and the deductible apply to each and every loss on each and every risk.
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an excess of loss reinsurance applicable to claims arising on individual risks.