What is the Primary burden of Risk?

Answer 1

The primary burden of risk is losses that are actually suffered by individuals, households or business units, as a result of pure risk events. These losses are often direct and measurable and can be easily compensated for by insurance.

Example

When a factory gets destroyed by fire, the actual value of goods damaged or destroyed can be estimated and the compensation can be paid to the one who suffers such loss.

Similarly, if an individual has a sudden heart attack and undergoes a heart surgery, the medical cost of the same is known and can be compensated.

In addition there may be some indirect losses. For example the fire may interrupt business operations and lead to loss of profits which also can be estimated and the compensation can be paid to the one who suffers such a loss.

Similarly, if someone loses his ability to go to work and earn his daily wages due to his heart attack, it is an indirect loss