Risk and insurance are two concepts that go together. Whereas risk is a part of everyday life, insurance is met to mitigate the impact of risk. The two may not always be in perfect alignment, but one can assume that any insurable risk can also have a policy.
Risk and insurance, in many ways, arose simultaneously in the human mind. Humans have been practicing risk mitigation for thousands of years, and yet formal insurance did not come about until a monetary economy did. The Code of Hammurabi in 1750 even stated that a ship master who was loaned a sum for his voyage should pay extra for the right to cancel the loan.
Modern insurance risk management practices arose in 17th century London. Llyods, a popular coffeehouse, became a meeting place for ship owners and investors, and investors often underwrote insurance. Over time, the exchange evolved into Lloyds of London, a formal insurance exchange that still exists. Risk insurance services appeared in other major trade centers.
Of course, risk and insurance are present in other areas of life, for the two complement each other. Home ownership is a great example. There is always the risk that a home could be destroyed by a natural disaster. When this happens, insurance can pay for it. Insurance research determines the likelihood of a natural disaster, and therefore what the insurance premiums should be.
Financial risk and insurance also go hand in hand. Take a bond, for instance, which always has the risk of default. Bond risk and insurance are often met by the issuer, where an insurance provider will pay the principal and outstanding interest if the issuer defaults. Often, these risk and insurance decisions lower the interest rate an issuer must pay.
Risk and insurance are inseparable. A good risk insurance company understands that. Anyone who carries risk should see what insurance comes with it.