Chapter 25- Introduction To Risk Management

Front 1

Risk

Back 1

The chance of financial loss from perils to people or property.

Front 2

Insurance

Back 2

A method for spreading individual risk among a large group of people to make losses more affordable for all.

Front 3

Insurer

Back 3

A business that agrees to pay the cost of potential future losses in exchange for regular free payments.

Front 4

Policy

Back 4

A written insurance contract.

Front 5

Premium

Back 5

The fee a policyholder agrees to pay to an insurance company periodically (monthyly, quarterly, annually, or semiannually) for an insurance policy.

Front 6

Policyholder

Back 6

The person who owns an insurance policy.

Front 7

Indemnification

Back 7

Putting the policyholder back in the same financial condition he or she was in before the loss occurred.

Front 8

Probability

Back 8

The mathematics of chance and the root of indemnification.

Front 9

Personal Risks

Back 9

The chances of loss involving your income and standard of living.

Front 10

Property Risks

Back 10

The chances of loss or harm to personal or real property.

Front 11

Liability Risks

Back 11

The chances of loss that may occur when your errors or inappropriate actions result in bodilyinjury to someone else or damage to someone else's property.

Front 12

Pure Risk

Back 12

A chance of loss with no chance for gain.

Front 13

Speculative Risk

Back 13

A risk that may result ineither gain or loss.

Front 14

Insurable Interest

Back 14

Any financial interest in life or property such that, if the life or property were lost or harmed, the insured would suffer financially.

Front 15

Risk Management

Back 15

An organized strategy for controlling financial loss from pure risks.

Front 16

Risk Avoidance

Back 16

Elimination the chance for loss by not doing the activity that could result in the loss.

Front 17

Risk Assumption

Back 17

Self-insuring; establishing a monetary fund to cover the cost of a loss.

Front 18

Risk Reduction

Back 18

Taking meausures to lessen the frequency or serverity of losses that may occur.