Insurance and Risk Management

Insurance and risk management in financial economics involve strategies to protect individuals and businesses from potential financial losses. Insurance provides a safety net by pooling premiums from many people to cover losses for those affected by unforeseen events, like accidents or disasters. Risk management identifies, evaluates, and prioritizes risks, implementing measures to mitigate them—such as purchasing insurance, creating emergency plans, or diversifying investments. Together, these practices help ensure financial stability, allowing people and organizations to navigate uncertainties confidently while maintaining their economic health.