For insurance companies risk management is critical to the success and viability of their business. As a result, they have therefore adopted strategies to manage the risks they are exposed to.  · Explain underwriting risk and discuss two risks faced by insurance companies.  · Discuss the importance of establishing an effective risk management policy at insurance companies to manage underwriting risks, giving one example of a risk management strategy used by insurance companies to mitigate such risks.  · Discuss the role of the Insurance Core Principles as it relates to underwriting risks, in the effective management of insurance companies. Refer to the following link, https://www.iaisweb.org/page/supervisory-material/insurance-core-principles-and-comframe

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Classification Of Risk

Risk means when there could be a possibility that the returns expected from a particular project or investment may or may not match the investor's expectations. In other words, the uncertainty of an income arising from a source that would either be lower than expected or result in losses in risk exposure of the project. The higher the risk involved, the higher is the return expected by the investor as the investor is exposed to a high level of risk. There are various methods by which different types of risk can be assessed and avoided or mitigated.