Risk is evaluated on the basis of ________ theory.

Question

Question: Risk is evaluated on the basis of ________ theory.

Options:

1.  Variability
2.  Contingency
3.  Probability
4.  All

Answer 1

3. Probability

Risk is evaluated on the basis of probability theory.

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More information:

Insurance works on the principle of sharing of losses, probabilities, large numbers.

Risk is evaluated on the basis of probability theory, a method used to predict the likelihood of a future outcome.

This act as a basis for making policies or fixing the amount of insurance premium.