RMIN 4000 Test 1(Chapters 1-4) with Complete Solutions!!

Traditional definition of risk - ANSWER-uncertainty Definition of risk - ANSWER-uncertainty about chance, timing, or amount of loss Chance of loss - ANSWER-the probability that an event will occur Objective risk - ANSWER-the relative variation of actual loss from expected loss Law of Large Numbers - ANSWER-Objective risk varies inversely with the square root of the number of cases E.X. car insurance subjective risk - ANSWER-uncertainty based on a person's mental condition or state of mind peril - ANSWER-the cause of the loss hazard - ANSWER-a condition that increases the frequency or severity of the loss types of hazards - ANSWER-physical, morale, moral, legal pure risk - ANSWER-chance of loss or no loss and no chance of gain speculative risk - ANSWER-chance of loss, no loss, or gain particular risk - ANSWER-a risk that affects only individuals as individuals fundamental or systematic risk - ANSWER-risk that affects a large number of individuals or the entire economy enterprise risk - ANSWER-a term that encompasses all major risks faced by a business firm. -operational risk -financial risk -strategic risk