INSURANCE does not transfer risk, it shifts the effect of the risk by means of festitution, i.e. the insurer restores the insured to its original position by payment to cover the damage. As for the experience of the event, the insured gets hit just the same, i.e. only direct financial impact is minimized.
FOR EXAMPLE, insurance against natural disaster, such as sunami on ocean front hotel. The insurance may pay for the physical damage under the policy (direct impact), but it does not pay for consequential damages, such as losing customers due to fear of repeated disaster. Thus, jnsurance may help to minimize the effect of risk, but does not cover all effects of risk.
of course insurance decreases the impact of risk, and I agree with Prof. Poul that its effect is limited in recovering the financial losses. But unlike tourism business, the risk in construction business is mainly about financial losses. Almost all constructions risks are usually evaluated in terms of financial losses starting from natural disasters, accidents, supplying chains and even time delay and penalty.
Insurance only compensates you financially for your loss, restoration and other consequences such as legal fees. Thus from a Risk Management perspective, insurance is part of your Business Continuity Plan.
Can you provide some more context into your question so that we cna prvoide you with more direct responses. Thanks.
Hi Rusuljaber Alqadhi !
Try to study about risk management strategyes (overview is available at https://www.pmi.org/learning/library/effective-strategies-exploiting-opportunities-7947). "Insuranse" is not correct action for "Mitigation" strategy.
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