Exam (elaborations)
RMIN 4000 Final Exam Questions and Answers 100% Solved
- Course
- Institution
RMIN 4000 Final Exam
[Show more]
Content preview
RMIN 4000 Final ExamPeril - answer Cause of loss
Risk - answer Uncertainty about chance, timing, or amount of loss
Chance of Loss – answer Probability that an event will occur
Objective Risk - answer The relative variation of actual loss from expected loss; (Actual-
Expected)/Expected; higher variation means higher risk
Law of Large Numbers - answer Objective risk varies inversely with the square root of
the number of cases
Subjective Risk - answer Uncertainty based on a person's mental condition or state of
mind
Hazard - answer A condition that increased the frequency or severity of the loss
Moral Hazard - answer Arson
Morale Hazard - answer Driving drunk
Pure risk - answer Chance of loss or no loss (no gain)
Speculative risk - answer Chance of loss, no loss, or gain
Particular risk - answer Risk that affects only affects individuals as individuals
Legal hazard - answer Large damage awards in litigation
Fundamental/systematic risk - answer Affects a large number of individuals or the entire
economy
Enterprise risk - answerAll major risks faced by a business
Direct loss (property) - answerFinancial loss that results from physical damage,
destruction, or theft
Indirect loss (property) - answerFinancial loss arising from loss of USE of property
, Liability risk - answerResponsibility for actions that cause injury or property damage to
another (no limit)
Fortuitous loss - answerUnforeseen and unexpected by the insured and occurs as a
result of chance
Risk Transfer - answerPure risk is transferred from the insured to the insurer, who
typically is in a better financial position to pay the loss than the insured
Indemnification - answerThe injured is restored to his approximate financial position
prior to the occurrence of the loss
Adverse Selection - answerThe tendency of persons with a higher-than-average chance
of loss to seek insurance at standard (average) rates, which if not controlled by
underwriting, results in higher-than-expected loss levels
Viatical settlement - answerBenefactor pays AIDS patient to take out life policy
Risk Management - answerFormal decision-making process to address risk, including
the potential financial consequences associated with loss exposures
Loss exposure - answerAny item exposed to loss; any situation in which a loss may
occur
Risk Control - answerReduce frequency or severity of losses
Risk Management Process (IESI) - answer1. Identify potential losses
2. Evaluate potential losses
3. Select appropriate RM technique
4. Implement and monitor
Risk Financing - answerTechniques that provide for the funding of losses
Retention - answerFirms retain part or all of the losses that can result from a given loss;
Ex: Expense, set aside liquid, credit line
Retention level - answerThe dollar amount of losses the firm will retain
Captive - answerInsurer owned by a parent firm for the purpose of insuring the parent
firm's loss exposure; have easier access to a reinsurer; source of profit
Self-Insurance (self-funding) - answerForm of retention; PArt or all of a given loss
exposure retained by firm; used for workers comp and health plans
Risk Retention Group - answerA group captive that can write any type of liability
coverage except employer liability, workers comp, and personal lines
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 julianah420. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
67866 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now