Insurance Fraud is scariest threat to most of the insurance companies. These companies are facing increasing fraudulent cases of insurance from past few years. These fraudulent cases increase the cost of premium which causes enormous problems to both policy holder and also to insurance companies. Such insurance fraud cases involve unauthorized and unlawful act. Risk management plays a crucial role in insurance industry to counteract these illegal activities. Thus, insurance companies are advised to use these risk managements plan for prevention of insurance fraud. The present study on insurance fraud can be used to analyze risk assessment and fraud pattern also prevention techniques used by organization. The reason of this study is to examine variety of insurance fraud and threat associated with it and formulation of risk management plans to reduce the insurance fraud to smallest possible degree