Lesson Notes By Weeks and Term - Senior Secondary 1

Term – 1^st Term

Week: 8

Class: Senior Secondary School 1

Age: 15 years

Duration: 40 minutes of 2 periods each

Date:       

Subject:      Insurance

Topic:-       Risk II

SPECIFIC OBJECTIVES: At the end of the lesson, pupils should be able to

1. Discuss the classification of risk, giving examples of each

INSTRUCTIONAL TECHNIQUES: Identification, explanation, questions and answers, demonstration, videos from source

INSTRUCTIONAL MATERIALS: Videos, loud speaker, textbook, pictures

INSTRUCTIONAL PROCEDURES

PERIOD 1-2

NOTE

Classification of risk

(a) Pure risk

This is a risk that relates to situations involving events that will definitely result to a loss if it happens and if otherwise, maintain its previous state of existence.

Examples of Pure risk 

1. A building is exposed to a danger of destruction by fire. If the building is destroyed or damaged by fire, there is a loss, if not, nothing will happen to the building and it will remain in its state.
2. A vehicle on the road is not immuned from accident; rather it may be damaged or damage other person’s properties or incur a liability following an injury sustained by a victim or a vehicle snatched at gun point by a gang of armed robbers. However the situation will be different if the vehicle returns home safely, because it will still maintain its previous state.

(b)Speculative risk

This is a risk that involves a situation involving an event that has the characteristics of profit, loss or breakeven.

Examples of Speculative risk 

1. Betting; it is a speculation for gain, but a gambler may lose his stake, just recover his stake, or win more than his stake.
2. Retailing; goods can be sold at a price higher or less than the purchased price or sold at purchased price (gain, loss, breakeven).

(c) Particular risk

This is a risk that involves situations involving events caused by an individual with the aftermath effect directed towards the individual. Examples of Particular risk 

1. Theft to properties
2. Professional negligence
3. Exposure to boiler etc.

(d)Fundamental risk

This is a risk that affects many people at once. It is a situation involving an event that is caused by the society we live in.

Examples of fundamental risk

They include unemployment, inflation and war. Such losses, when they occur, are impersonal because their effects are widely felt and not directed towards a particular person or group of persons.

(e) Static risk

Static risks involve those losses that would occur even if there were no changes in the economy. These losses arise from causes other than the changes in the economy. Static risks are not a source of gain to the society. They involve either the destruction of the asset or a change in its possession as a result of dishonesty or human failure. Note that:  Static losses tend to occur with a degree of regularity over time and, as a· result, are generally predictable.  They are more suited to be controlled by insurance than other risks.

Examples of Static risk 

1. Perils of nature
2. Dishonesty of some individuals
3. Destruction of assets
4. Human failure

(f) Dynamic risk

This is a risk that can change from one form to another. That is from particular risk to fundamental risk.

Examples of Dynamic risk 

Unemployment which was once regarded as a particular risk and considered to be caused by attitude towards work or lack of training on the part of individual concerned, is now classified as a fundamental risk because it is now believed that it occurs due to malfunctioning of economic system.  Motor accident is now caused by a combination of factors such as bad roads, poor traffic control, flooding and not as before when it was considered to be due to lack of driving experience (particular risk)

EVALUATION:    1. Outline all the classes of risks, explaining two examples of each

CLASSWORK: As in evaluation

CONCLUSION: The teacher commends the students positively