Insurance is nothing but a management related to risks. It is a way of risk management. Basically all risks are classified in two different categories.
1. Systematic Risk
2. Specific Risk
Systematic Risk: It influences a large number of assets. This kind of risks needs more attention towards it, because if it is not managed properly or in systematic way, you may have suffered at large extent. The risk management for this kind of risks should be hard-cored and implemented as soon as possible. It includes huge losses so needs quick decision and good leadership quality and kept more importance than any other kind of risks. Ignorance of this may be harmful so be aware of it always.
Specific Risk: It is known as unsystematic risk. It might be unsystematic but having much importance since it is also a risk. Its ignorance also may costly but comparing with the systematic, it is quite negligible. This kind of risk affects a very small number of assets. It can be handled while delay to make a decision related to specific risks.
There are four kinds of risks in business point of view
1. Strategic: you should make a strategy as soon as possible while a competitor coming on to the market.
2. Compliance: Quick response needed when introduction of new health and safety legislation take place.
3. Financial: If increased in the interest charges on a business loan, its major risk.
4. Operational: If the key equipment theft or gets breakdown.
Your business can be fall in one or more than one categories at a time because these categories are not rigid. If it happens, you need more attention and emergency meetings with your employees and quick decision.
While talking about backpacker insurance, a backpacker can have faced many problems while under backpacking because he is new for that particular place. He has many risks there which should be managed by him using backpacker insurance. His purse can be stolen, flight can be canceled etc. his risk can be managed on very little amount which is to be paid as a premium amount. Insurance company will cover all the risk when under backpacking.