Unit 1 - ISR3701
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1. Risk The uncertainty of loss.
2. Risk Manage- a process that identifies loss exposures faced by an orga-
ment nization and selects the most appropriate techniques for
treating such exposures
3. Speculative risk a situation in which either profit or loss is possible.
4. Event Risk the risk that some major, unexpected event will occur that
leads to a sudden and substantial change in the value of
an investment
5. examples of gambling, buying stock, buying a home
speculative risk
6. examples of - Decrease in value of insurance company stock after a
event risk major hurricane
- Decrease in value of real estate after a major earthquake
7. Risk Manage- The method of making, implementing, and monitoring de-
ment Process cisions that minimize the adverse effects of risk on an
organization.
8. Risk Manage- (I) Risk Identification
ment Process
Phases At this phase, risk is identified by looking at organizational
charts, flow charts or checklists.
(II) Risk Evaluation
At this phase, the risk manager accesses the severity and
frequency of the risk. Risk is assessed through quantita-
tive and qualitative measures:
- Quantitative measures:- Using statistical data to evaluate
the risk.
- Quantitative measures:- Investigating the cause of loss-
es.
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