RMIN 4000 Test 1 Brown UGA (Graded A+ actual test)
0 view 0 purchase
Course
RMIN 4000 Brown UGA
Institution
RMIN 4000 Brown UGA
systemic risk - ️️the risk that the failure of one financial institution can bring down
other institutions as well. instability in the financial system due to the interdependency
between the players in the market
Liability Risk - ️️a risk that relates to harm or injury to other people or...
RMIN 4000 Test 1 Brown UGA
systemic risk - ✔️✔️the risk that the failure of one financial institution can bring down
other institutions as well. instability in the financial system due to the interdependency
between the players in the market
Liability Risk - ✔️✔️a risk that relates to harm or injury to other people or their property
because of your actions; no upper limit; Defense costs; liens may be placed on income
or assets may be siezed
Non-Diversifiable Risk - ✔️✔️affects the entire economy or large numbers of persons
or groups within the economy (hurricane, flood), risks are correlated (inflation,
unemployment) cannot be eliminated through diversification
Exposures - ✔️✔️things of value (assets) that could be lost
Perils - ✔️✔️things that cause injury or loss
risk - ✔️✔️a calculated possibility of a negative outcome
Frequency - ✔️✔️the number of losses (such as fire or theft) that occur within a
specified time period. aka the probability of a loss
Severity - ✔️✔️the dollar amount of a loss for a specific peril (fire, theft, collision) aka
How much does it cost when the loss does occur?
Hazard - ✔️✔️a condition that creates or increases the frequency or severity of loss but
does NOT cause the loss.
Physical Hazard - ✔️✔️a physical condition that increases the frequency or severity of
loss
Moral Hazard - ✔️✔️the presence of insurance changes the behavior of the insured.
ex: making hail damage to get a check
Morale hazard (attitudinal hazard) - ✔️✔️A condition of carelessness or indifference
that increases the frequency or severity of loss.
Legal Hazard - ✔️✔️characteristics of the legal system or regulatory environment that
increase the frequency or severity of losses
, Georgia's Diminution in value is an example of a - ✔️✔️legal hazard because it
increases the severity on property losses
Pure Risk - ✔️✔️A chance of loss or no loss, but no chance of gain. Insurance can be
bought for this
Speculative Risk - ✔️✔️A chance of loss, no loss, or gain.
Diversifiable risk - ✔️✔️a risk that affects only individuals or small groups and not the
entire economy. It can be eliminated/ reduced through diversification. the risks are not
correlated
Developing cancer or your house being caught on fire are two examples of what kind of
risk? - ✔️✔️Pure Risk
diversifiable risk - ✔️✔️A risk that affects only some individuals, businesses, or small
groups. they can be reduced/eliminated through diversification. the risks are not
correlated
Enterprise Risk - ✔️✔️encompasses all major risks faced by a business firm, which
include: pure risk, speculative risk, strategic risk, operational risk, and financial risk
Types of Pure Risk - ✔️✔️personal risks, property risks, liability risks, loss of business
income, cyber-security risks
Personal risk - ✔️✔️a risk that can directly affect an individual or a family; loss of
income, extra expenses, and depletion of financial assets
Property Risk - ✔️✔️a risk that can lead to destruction or theft and loss of personal or
business property including money, vehicles, and buildings; 2 types (direct and indirect)
Direct Loss - ✔️✔️cost to replace a loss that is a direct result of a peril, such as fire.
Indirect Loss - ✔️✔️Loss that is a result or consequence of a direct loss
Loss of business income - ✔️✔️Financial loss when the firm must shut down for some
time after a physical damage loss
Grease fire in the kitchen causes a restaurant to close down for 4 weeks while repairs
are made. The restaurant has no income while closed. this is an example of: -
✔️✔️Loss of business income
2 techniques for managing risk - ✔️✔️risk control, risk financing
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ACADEMICMATERIALS. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $7.99. You're not tied to anything after your purchase.
