CHAPTER 3Risk Concepts and Employee Benefit Planning
RISK AND EMPLOYEE BENEFITS
The concept of risk is fundamental in any discussion of employee benefit planning.
Definition of Risk
For our purposes, risk will mean uncertainty with respect to possible loss. In other words, it is the inability to determine a future loss and to figure out how expensive it will be should the loss take place. For example, individuals have very little ability to know when they will die, or become ill, disabled, or unemployed. All the typical potential losses associated with employee benefits are “risks” from the standpoint of the individual. Loss is meant to convey any decrease in value suffered. A hospital bill associated with an illness could result ...
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