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RMI 300 Exam 1 Rated A+ 2024
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RMI 300 Exam 1 Rated A+ 2024
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RMI 300 Exam 1 Rated A+ 2024Actual cash value - ANSWER-(% of remaining life of asset) * (replacement cost new)
Used by insurers to determine how much to pay
Adverse consequences in risk involve...(3) - ANSWER-1. Giving up possible benefits
b/c risk exists
2. Spending resources to reduce risk (risk/loss control and risk/loss financing)
3. Generally NOT lost costs, although organizations prefer they be lower too (b/c once
losses have occurred, there is not risk left)
Adverse consequences of risk: Spending to reduce risk
risk/loss control vs risk/loss financing - ANSWER-Risk/loss control are techniques to
control risk, usually are very costly. (ex: control safety by installing sprinkler system)
Risk/loss financing is basically buying insurance
Book value - ANSWER-Historical cost - depreciation
use straight-line depreciation
Civil wrongs (and two types) - ANSWER-Acts against an individual, corporation, or
entity
(breach of contract, tort)
Some wrongs can be both criminal AND civil (taken to court by state and by victim)
Civil wrongs: Breaches of contract - ANSWER-Breached contract
Civil wrongs: tort - ANSWER-A wrongful act or infringement of a right that is not a
breach of contract, leading to a civil legal liability
Common law vs. civil law - ANSWER-Common law: rules determined by court decisions
(precedent)...greater flexibility BUT more variability in outcomes
Civil law: rules determined by legislature...very inflexible BUT limits variability in
outcomes
Communication of org. objectives: internal communication and external communication
- ANSWER-Internal: mission statement, employee handbook
External: ads, news releases, spokesperson
Consequential loss potentials (net income loss potentials, element loss potentials) -
ANSWER-Conditions that may result in a reduction in revenues or increase in expenses
due to the disruption of normal operations caused by some other event
Consequential loss potentials: exposures - ANSWER-These have represented the
reduction in revenues or increase in expenses due to disruption of normal operations
caused by property loss
, Consequential loss potentials: filing of a legal claim - ANSWER-Think of
consequences...
1) Alter potentially productive operations (might stop selling product due to legality)
2) Reputation risk (think Wendy's finger chili) ...lose customers or spend big $$ to keep
them
Consequential loss potentials: hazards (two main) - ANSWER-1) How easy is the
underlying property to replace (uniqueness)
2) Extent of dependency on property (do you produce everything in once location?)
Consequential loss potentials: loss of human capital interrupts operations - ANSWER-
Reduced revenue due to the loss of a key employee...they may be key to a particular
revenue source
Consequential loss potentials: perils (property owned by company) - ANSWER-
Damage/loss of property causes inability to operate in the same way
Ex: cannot provide service b/c operations are shut down or able to provide service only
with increased expenses
Consequential loss potentials: perils (property owned by someone else) - ANSWER-Key
buyer: If you sell all of your product to one company, you are exposed to the risks of
that buyer
Key supplier: If 80% of your inputs come from China, you must understand you assume
that risk
Magnet organization: Small orgs take rely on the existence of bigger orgs to drive
business (Macy's magnet org in the mall)
Criminal wrongs - ANSWER-Acts against society. Criminal wrongs yield jail time, fines,
etc.
Rules regarding these are usually in legislation
(speeding, DWI, OWI)
Defenses against liability: assumption of risk - ANSWER-The plaintiff was aware that it
was a dangerous situation and accepted the danger anyways.
Ex: You ignore street signs that get you into an accident
Defenses against liability: comparative negligence - ANSWER-Shared
Plaintiff receives whatever percent fault they are not responsible for
Defenses against liability: contributory negligence - ANSWER-All or nothing
If plaintiff is negligent in any way, the plaintiff gets nothing
Defenses against liability: immunity - ANSWER-Circumstances where society believes
someone should not be found negligent in a certain situation
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