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CPCU 500 - FOUNDATIONS OF RISK MANAGEMENT AND INSURANCE| COMPLETE SOLUTION
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CPCU 500 - FOUNDATIONS OF RISK MANAGEMENT AND INSURANCE| COMPLETE SOLUTION
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CPCU 500 - FOUNDATIONS OF RISK MANAGEMENT AND INSURANCE| COMPLETE SOLUTION CHAPTER YY1 YY- YYcorrect YYanswer's YY... What YYare YYthe YYtwo YYelements YYof YYrisk? YY- YYcorrect YYanswer's YY-Uncertainty YYof YYoutcome YY- YYTime YYof YYthe YYoutcome YYand YYtype YYof YYoutcome YYare YYuncertain -possibility YYof YYa YYnegative YYoutcome YY- YYat YYleast YY1 YYoutcome YYis YYnegative What YYis YYthe YYdifference YYbetween YYprobability YYand YYpossibility? YY- YYcorrect YYanswer's YYPossibility YY- YYan YYoutcome YYor YYevent YYmay YYor YYmay YYnot YYoccur. YYIt YYdoes YYnot YYquantify YYthe YYrisk, YYonly YYverifies YYthe YYrisk YYis YYthere Probability YY- YYthe YYlikelihood YYthan YYan YYoutcome YYwill YYoccur, YYquantifies YYthe YYrisk. YYIt YYis YYmeasurable YYand YYhas YYvalue YYbetween YYzero YYand YYone How YYdoes YYprobability YYhelp YYan YYorganizations YYrisk YYmanagement YYexposure? YY- YYcorrect YYanswer's YY-by YYunderstanding YYthe YYprobability YYof YYan YYexposure, YYan YYorganization YYcan YYfocus YYits YYrisk YYmanagement YYefforts YYto YYavoid YYit. -helps YYorganization YYdecided YYwhat YYprojects YYand YYactivities YYto YYundertake How YYdoes YYclassifying YYa YYrisk YYhelp YYan YYorganizations YYrisk YYmanagement YYprocess? YY- YYcorrect YYanswer's YY-can YYhelp YYwith YYassessing YYrisk YYcause YYmany YYrisks YYin YYthe YYsame YYclassifica tion YYhave YYsimilar YYattributes -helps YYmanage YYrisks -helps YYadministrative YYfunction YYof YYRM YYby YYhelping YYto YYensure YYthe YYrisks YYin YYsame YYclass YYare YYless YYlikely YYto YYbe YYoverlooked -Compare YYpure YYrisk YYwith YYspeculative YYrisk -why YYis YYit YYimportant YYto YYdistinguish YYbetween YYthe YY2 YYwhat YYmaking YYrisk YYmanagement YYproceduces YY- YYcorrect YYanswer's YYpure YYrisk YY- YYchange YYof YYloss YYor YYno YYloss YYbut YYno YYgain speculative YYrisk YY- YYinvolves YYa YYchance YYof YYgain YYtype YYof YYSR YYincludes: YYprice YYrisk YYand YYcredit YYrisk YY(financial YYinvestments YYinvolve YYa YYdistinct YYset YYof YYspecu lative YYrisks) its YYimportant YYwhen YYmaking YYRM YYdecisions YYcause YYthe YY2 YYtypes YYmust YYoften YYbe YYmanaged YYdifferent. YY*most YYinsurance YYpolicies YYare YYnot YYdesigned YYto YYhandle YYspeculative YYrisks* *insurable YYrisks YYare YYgenerally YYclassified YYas YYpure, YYobjective, YYand YYdiversafiable* - YYHow YYdoes YYsubjective YYand YYobjective YYrisk YYdiffer? YY- YYcorrect YYanswer's YYsubjective YYrisk YY- YYperceived YYamount YYof YYrisk YYbased YYon YYindividuals YYor YYorganizations YYopinion objective YYrisk YY- YYmeasurable YYvariation YYin YYuncertain YYoutcomes YYbased YYon YYfacts YYand YYdata where YYthey YYdiffer YY(see YYpage YY1.8): 1. YYFamiliarity YYand YYcontrol YY 2. YYconsequences YYover YYlikelihood 3. YYRisk YYAwareness -Contracts YYdiversifiable YYand YYnondiversifiable YYrisk? YY- YYcorrect YYanswer's YYdiversifiable YYrisk YY- YYis YYnot YYhighly YYcorrelated YYand YYcan YYbe YYmanaged YYthrough YYdiversification non-d YYrisk YY- YYis YYcorrelated, YYlosses YYand YYgains YYoccur YYtogether YY(type: YYsystemic YYrisk YY- YYpotential YYfor YYa YYmajor YYdisruption YYin YYthe YYfunction YYof YYan YYentire YYmarket YYor YYfinancial YYsystem - YYDescribe YYthe YYquadrants YYof YYrisk YY- YYcorrect YYanswer's YYway YYof YYcategorizing YYrisk YYis YYputting YYthem YYin YYquadrants: -hazard YYrisk YY- YYproperty, YYliability, YYand YYpersonnel YYloss, YYgenerally YYthe YYsubject YYof YYinsurance -operational YYrisks YY- YYfall YYoutside YYhazard YYcat, YYarise YYfrom YYpeople YYor YYfailure YYin YYprocess, YYsystem, YYor YYcontrol, YYincluding YYinfo YYtech -financial YYrisks YY- YYeffect YYof YYmarket YYforces YYon YYfinancial YYassets YYor YYliabilities YYand YYinclude YYmarket YYrisk, YYcredit YYrisk, YYliquidity YYrisk YYand YYprice YYrisk -strategic YYrisks YY- YYarise YYfrom YYtrends YYin YYthe YYeconomy YYand YYsociety, YYincluding YYchanges YYin YYecon, YYpolitical YYand YYcompetitive YYenvironments, YYas YYwell YYas YYfrom YYdemographic YYshirts *see YYgraph YYon YY1.10* What YYare YYthe YY3 YYcomponents YYto YYconstitute YYthe YYfinancial YYconsequence YYof YYrisk YYfaced YYby YYindividuals YYor YYorganizations? YY- YYcorrect YYanswer's YY- YYexpected YYcost YYof YYlosses YYor YYgains - YYexpenditures YYon YYRM - YYcost YYof YYresidual YYuncertainty What YYare YYhidden YYcosts YYthat YYcan YYaffect YYan YYorganization's YYcalculation YYof YYexpected YYcosts YYof YYloss? YY- YYcorrect YYanswer's YY-time YYlost YYby YYthe YYinjured YYemployee -time YYlost YYby YYother YYemployees YYwho YYstop YYwork -time YYlost YYby YYforemen, YYsupervisors YYor YYother YYexecs -time YYspent YYon YYthe YYcase YYby YYfirst-aid YYattendants YYand YYhospital YYdepartment YYstaff -damage YYto YYequipment -interference YYwith YYproduction -continuation YYof YYinjured YYemployees YYwages -loss YYof YYprofit YYon YYinjured YYemployees YYproductivity YYand YYon YYidle YYmachines -lost YYproductivity YYbecause YYof YYemployees YYexcitement YYor YYweakened YYmoral YYfrom YYthe YYaccidentThe benefits of buying summaries with Stuvia:
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