This paper was developed by the Risk Classification Monograph Work Group of the American Academy of Actuaries at the request of the Academy’s Risk Management and Financial Reporting Council.   Its purpose is to provide background and information to the public regarding the purpose of risk classification and the design and management of risk classification systems.  It is also designed to provide a systematic development of these concepts for actuaries and other professionals in a form applicable to all areas of actuarial practice.  Some of the topics discussed in the paper are risk and risk subjects, transfer of risk, financial or personal security systems, the impact of individual choice on such systems, voluntary and compulsory systems, the importance of expected cost in managing such systems, the need for risk classification, risk characteristics, risk classes, risk classification and the success of financial or personal security systems, and considerations in designing and maintaining a risk classification system.  The paper may be expected to heighten the awareness of the audience to the complexity of the issues surrounding risk classification and provide a carefully reasoned discussion of these issues.  A summary of the paper could be given as a presentation, with questions from the audience entertained.