For a risk to be insurable, it must meet specific criteria, including the ability to clearly define and quantify the potential loss. A risk becomes uninsurable if losses:
Cannot be Tied to an Occurrence: Without a definitive event or trigger, insurers cannot attribute or assess the loss.
Lack Established Amount: Insurance requires measurable loss values to determine premiums and payouts.
Other Characteristics of Insurable Risks:
Predictable through the law of large numbers.
Accidental and unintended losses.
CPP® Context and Significance:
Risk and Insurance Principles: Emphasizes understanding the insurability criteria when evaluating risks for transfer to insurers.
Strategic Risk Mitigation: Guides security professionals in identifying risks that require alternative risk management methods.
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