Financial risks for both the insurer and insured are classified as: Capital risk Asset Liability management risk Insurance risk Credit risk Discuss each risk separately with their sub-categories of risks.

Capital risk is the potential of loss of part or all of an investment. It applies to the whole gamut of assets that are not subject to a guarantee of full return of original capital. Capital risk includes capital structure risk and capital (in) adequacy risk. Asset and liability management gets used by financial institutions to help mitigate potential financial risks. These risks are usually the result of a discrepancy between current assets and liabilities. Asset liability management risk includes exchange risk, interest rate risk and investment risk. Risk in insurance can be referred to as the possibility or chance that any unexpected event or events will occur leading to the loss of life or loss or damage to any property of the person who takes insurance by paying the insurance premium calculated by the insurers based on the probability of an event and its impact. Insurance risk includes underwriting risk, catastrophe risk, reserve risk and claims management risks. Credit risk is the possibility of a loss resulting from a borrower's failure to repay a loan or meet contractual obligations. Credit risk includes reinsurance risk, policyholders and brokers' risks and claims recovery risks and other debtor's risks.