Insurance is a very important factor in achieving the financial viability of an economy. This is a very difficult concept that requires deep in-depth scholarship of insurable interests, viable policyholders, risk assessment and management. This essay seeks to provide an overview of insurance; in particular on the assessment, measurement and management of human-caused risks and natural disaster risks. The essay further highlights the known formulas adopted to measure human-caused risks. In addition to this, it would provide a concise development and challenges arising from the use of risk assessment formulas. Finally, the essay will highlight the previously emerged difficulty of assessing, measuring and managing natural disaster risks and will also elucidate the importance of science and technology in natural disaster risk assessment . Insurance: Its Definition and Conceptualization The scholarship of economics is a never-ending process. Indeed, the economy is multifaceted and therefore very complex. Regardless, economists and financial experts congruently explain that the viability of the economy depends on financial stability. Financial stability is based on the need to achieve a perfect balance between savers and borrowers; savers are synonymous with investors. This complex balancing act can only be achieved if more investors are incentivized to pump money into the economy. The precept of assurance (Rajan 2005 p12) provides an incentive to achieve this. Insurance is a concept that generates the equitable transfer of risk of loss from one party to another for the exchange of payment. It thus seeks to manage unpredictable risks. There are generally two parties to an insurance contract...... middle of paper ...... in economics and highlighted how their relationships are intertwined. It gives a brief description of the importance of insurance in an economy. The paper highlighted the risks involved in an economy that requires a panacea from the insurance sector. It highlighted the revolution in risk assessment models related to human-caused risks and elaborated current developments in the models; both in application and in attitudes. He further highlighted the complexities involved in insuring against very severe natural disasters. The document explains the different probabilistic modules adopted to estimate the amount of risk arising from insurance against natural disasters; earthquakes are a good example. It was thus established that through the modules, insurance companies are able to assess the viability of insurance against natural disasters, thus improving financial management..