Risk is uncertainty about an event and its financial consequences. Insurers assess both the likelihood of a loss and its possible size when deciding whether to offer insurance and how much premium to charge. A rare earthquake can create a much larger loss than a frequent minor vehicle accident.
In Nepal, exposure can differ sharply between a hillside home, a city shop, and a transport business. Managing risk can involve safer construction, maintenance, savings, and insurance together. Disclosing the actual location and use of insured property helps the insurer evaluate the exposure correctly.