What can result from a lack of risk management in insurance practices?

A lack of risk management in insurance practices can lead to uninsured major losses, which is the correct answer. This occurs because effective risk management strategies are designed to identify, assess, and mitigate potential losses that an insurance company could face. Without these practices in place, the organization might not adequately cover significant risks, leading to potentially substantial financial repercussions from events that could have been anticipated and addressed.

When risk management is neglected, the insurer may underestimate their exposure to certain risks or fail to develop appropriate coverage plans. Consequently, if a significant loss occurs, the insurer may find itself unprepared to manage the financial burden, resulting in substantial uncovered losses.

While increased awareness of risks, financial stability of the firm, and restricted coverage options are all aspects of the insurance landscape, they do not directly indicate a consequence of a lack of risk management. Instead, they are more likely to arise from effective risk management practices or the context in which an insurer operates.