Exam (elaborations)
Final Study Set. RMIN 4000 - Daniel Jeremy Brown Questions and Answers 2024
- Module
- Institution
Final Study Set. RMIN 4000 - Daniel Jeremy Brown
[Show more]
Content preview
Final Study Set. RMIN 4000 - DanielJeremy Brown
Exposures - answer Things of value (assets) that could be lost (Any
situation/circumstance in which a loss is possible, regardless of whether a loss actually
occurs)
Perils - answer Things that could happen to your assets - cause of loss
Risk Management - answer What you do to protect these assets and/or prevent/reduce
losses (Identifies loss exposures faced by an organization and selects the most
appropriate techniques for treating such exposures)
Risk - answer The calculated possibility of a negative outcome
Loss - answer Negative outcome - must be quantifiable
Frequency - answer How often a loss occurs (number of losses that occur within a
specified time period)
Severity - answer How much a loss costs when it does occur (the dollar amount of loss
for a specific peril
Hazard - answer Condition that creates or increases frequency/severity of loss
Physical Hazard - answer A physical condition that increases the frequency/severity of a
loss
Moral Hazard - answer Presence of insurance changes the behavior of the insured
Morale (Attitudinal) Hazard - answer Carelessness/indifference to a loss (increases
frequency/severity of a loss)
Legal Hazard - answerCharacteristics of legal system/regulatory environment that
increase the frequency and/or severity of a loss
Pure Risk - answerTwo outcomes possible: loss or no loss (can purchase insurance for
this)
Speculative Risk - answerThree outcomes possible: loss, no loss/no gain, or gain
(cannot purchase insurance for this)
, Diversifiable Risk - answerAffects only individuals/small groups, not entire economy:
can be reduced/eliminated thru diversification (ex: fire, theft, collision)
Nondiversifiable Risk - answerAffects entire economy/large numbers of groups/persons
within the economy - can't be reduced thru diversification, government assistance may
be needed to insure (correlated risks, ex: hurricane)
Enterprise Risk - answerAll major risks faced by a business firm (pure, speculative,
strategic, operational, financial)
Systemic Risk - answerRisk of collapse of an entire system/market due to the failure of
a single entity/group of entities
Instability in the financial system due to the interdependency between the players in the
market
Personal Risk - answerDirectly affects an individual/family - involve the possibility of
loss of income, extra expenses, depletion of financial assets (ex. of perils: death,
unemployment, disability, etc.)
Property Risk - answerPossibility of losses associated with the destruction or theft of
property (Direct loss: cost to repair, Indirect loss: cost to live elsewhere during repairs)
Liability Risk - answerLegal liability (financial consequences) resulting from
injuries/damages you caused - no upper limit
Loss of Business Income - answerBusiness having to shut down for a period of time
due to physical damage loss: unable to generate an income
Risk Control - answerTechniques to reduce the frequency/severity of losses
Risk Financing - answerTechniques for funding losses
Loss Prevention - answerReduces frequency (airport security, safety training programs)
Loss Reduction - answerReduces severity (fire sprinklers) - can occur pre or post loss
Avoidance - answerType of risk control in which a certain loss exposure is never
acquired (frequency = 0) - many downsides
Retention - answerRetaining part or all of losses that can occur from a given risk (active:
deliberate, passive: unknowing)
Good when a risk is difficult to insure, low severity, predictable loss
Noninsurance Transfer - answerMethods other than insurance by which a pure risk and
its potential financial consequences are transferred to another party (by contract,
hedging, incorporation)
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 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 julianah420. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $14.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79373 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now
