Definition of insurance is easy enough to be found in Wikipedia, dictionaries and Google searches. We have often heard people talk about being safe because of being insured. There are many ways to tell a story, for us to understand why insurance is a small but very critical part of doing business.
This story is one approach of many to come from me in future postings.
To begin with, a single cigarette butt could spark a fire that destroy an entire building, a town and a forest. Such is the nature of tiny, rare, very difficult to predict and catastrophic impact of risk. A small neglect, can lead to another and another and cause huge losses and damages as we too often seen in numerous costly incidences ranging from bad financial loans, to oil spillages, building & bridge collapses, ravaging fires, and fatal motor vehicle, airplane, sea vessel’s accidents.
In the ancient history of civilizations, insurance begin with people’s need for security and fear for uncertainties. The commitment of “one for all and all for one” is the most basic principle of insurance. A person naturally tried satisfy his need for security by himself; and then seek support from his family, his group of neighbors, his circle of friends, the group he work for and so on.
In a world where we increasingly work in highly specialized areas, the value of business is increasingly concentrated in a particular niche segment. With that, insurance has grown to become a crucial tool to diversify risks and provide an opportunity for a business to continue to be in operation, in case of a big loss.
Henry Ford of Ford Motor was once said to have heard a visitor to New York express wonder at the sight of the magnificent city with its soaring buildings. Ford’s reply, acknowledge the significance of insurance: “This has only been made possible by the insurers,” he said. “They are the ones who really built this city. With no insurance, there would be no skyscrapers. No investor would finance buildings that one cigarette butt could burn to the ground.”
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Project managers often manage to get away from blame by ‘thick technical report’ which shift any blame to act of god incidence, unpredictable weather condition, bureaucratic approving authorities, unforeseen escalation of prices, unexpected soil condition and whatever else excuses which sound rational to the higher management.
