Attitudinal hazard correct answers carelessness/indifference to a loss; increases frequency/severity of loss
Avoidance correct answers risk control technique, certain loss exposure never acquired abandoned
Chance of loss correct answers probability that a loss will occur.
Diversification c...
INSR 310 FINAL || A+ Graded Already.
Attitudinal hazard correct answers carelessness/indifference to a loss; increases
frequency/severity of loss
Avoidance correct answers risk control technique, certain loss exposure never acquired
abandoned
Chance of loss correct answers probability that a loss will occur.
Diversification correct answers a risk-control technique that reduces the chance of loss by
spreading the loss exposure across different parties, securities, or transactions
Diversifiable risk correct answers affects only individuals/small groups and not the entire
economy, can be reduced or eliminated by diversification
Enterprise risk correct answers encompasses all major risks faced by a business firm; include
pure, speculative, strategic, operational, and financial risk.
Enterprise risk management correct answers combines into a single unified treatment program all
major risks faced by the firm
Financial risk correct answers uncertainty of loss b/c of adverse changes in the commodity
prices, interest rates, foreign exchange rates, and the value of money
Hazard correct answers condition that creates or increases the chance of loss; Frequency or
Severity of loss
Hedging correct answers technique used for transferring the risk of unfavorable price
fluctuations to a speculator by purchasing and selling options and futures contracts on an
organized exchange
Human life value correct answers LIFE INSR purposes, present value of family's share of
deceased breadwinner's future earnings.
Law of large numbers correct answers the greater the # of exposures, the more closely will actual
results approach the probable results expected from an infinite # of exposures
Legal hazard correct answers characteristics of the legal system or regulatory environment that
increase the frequency or severity of losses
Liability risks correct answers type of PURE RISK that most persons face; Can be held legally
liable if you do something that results in BI or PD to someone else; Court order you to pay
damages to person you injured
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