Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
44 Cards in this Set
- Front
- Back
pure risk |
a chance of loss or no loss but no chance of gain |
|
speculative risk |
a chance of gain |
|
credit risk |
risk that customers will fail to make payment |
|
subjective risk |
assessment based on opinion |
|
objective risk |
assessment based on fact |
|
diversifiable risk |
occur randomy, spread of risk |
|
probability |
the likelyhood that an outcome will occur |
|
2 elements of risk |
1. uncertainty of outcomes 2. possibility of negative outcome |
|
possibility |
an outcome may or may not occur |
|
subjective & objective risks differ |
* familiiarity & ontrol (flying vs driving) * severiy over frequency * consequences over likelyhood * risk awareness |
|
+ diversible v non diversible |
diversible is random and spreadout non diversible is simultaneous |
|
quandrants of risk |
hazard oprational financial strategic |
|
3 components that constiture financial conequence |
1. expected cost of loss/gains 2. expenditures on risk management 3. cost of residua uncertainty |
|
reseidual uncertainty |
level of risks that remains after risk managment plan is implemented |
|
risk management |
effors of indivdual or organization to efficiently and effectively assess, control, finance risks in order to minimize losses |
|
traditiional risk management |
associated with pure as opoosed to speculative risks (insurance, safety, etc.) |
|
enterprise wide risk management |
broader view of risk mangement. intent is to maximize value |
|
loss exposure |
any condition that presents a posibility of a loss |
|
hazard |
a condition that increase the frequency or seveity of a loss |
|
moral hazard |
a condision that increases the likelihood that a person will intentionally cause a loss |
|
morale hazard |
condition of carelessneess that measures the frequency/severity of a loss |
|
physical hazard |
tangible characteristic of property, persons, or operaions that tend to increase the frequency/severity of loss |
|
legal hazard |
a condition of the lega envirnment that increases severity/frequency |
|
property loss expsure |
damage to physical property |
|
tangible property |
property that can be physically touched |
|
real property |
tangible property consisting of land, sheds, ataced to land and plants |
|
persoanl property |
all tangible property that is not real propety |
|
intangible property |
property without physical form |
|
liability loss exposure |
pssibiliy of claim alleging lega responsibility |
|
business income exposure |
loss caused by person's deth, diability, |
|
personanel loss exposured |
loss caused by death, retirement, disability, ect. |
|
3 elements ooto describe loss exposure |
1. an asset exposed to loss 2. cause of loss 3. financial consequencces |
|
,4 classificcations of hazard |
1. moral (unhonest person - theif) 2. morale - care or awareness (not clearing isc) 3. physical - damage to property 4. legal - lawsuits |
|
3 factors that affect financial |
1. type of loss 2. cause of loss 3. loss fruency and severity |
|
cost used to compute overall financial consequences for a risk |
1. cost of the value lost bc of actual events 2. cost of resources 3. cost of residual uncertainty[ |
|
pre loss goals |
goals to accomplish before a loss |
|
post loss goals |
risk management program goals in place in event of a loss |
|
4 pre loss operational goals |
1. economy of operation 2. tolarable uncetainty 3. legality 4. social responsibility |
|
6 post loss goals |
1. survival 2. continuity of operations 3. profitability 4. earnings of stability 5. social responsiblity 6. growth |
|
steps organization take to forstall intolerable shut down |
1. identify activities whose interuptions can't be tolerated 2. identify types of events that could interupt activities 3. determine standby resources that must be immediatly available 4. ensure availablity of standby resources |
|
6 steps in risk managment process |
1. identify loss exposure 2. analyze loss exposure 3. examine feasibility of risk management technique 4. select appropriate risk management technique 5. implement the selected techniquie 6. monitor results and revise |
|
4 diminsiouns for loss exposure |
1. loss frequency 2. loss severity 3. total dollar losses 4. timing |
|
forecast of organization1. |
1. forecast of diminsions of expected losses 2. forecast of each feasible combination of risk management 3. forecast of after tax cost |
|
4 steps to monitor reisk maangement program |
1. establish standards of acceptable results 2. compare actual results w the standards 3. correcting substandard performance 4. evaluating stands that have been exceeded |