RMI 211: Chapter 3 - Introduction to Risk Management
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Course
RMI 211
Institution
RMI 211
RMI 211: Chapter 3 - Introduction to Risk
Management
Risk Management - answera process that identifies loss exposures faced by an organization
and selects the most appropriate techniques for treating such exposures
Loss Exposure - answerany situation or circumstance in which a loss is possible,...
RMI 211: Chapter 3 - Introduction to Risk
Management
Risk Management - answer✔✔a process that identifies loss exposures faced by an organization
and selects the most appropriate techniques for treating such exposures
Loss Exposure - answer✔✔any situation or circumstance in which a loss is possible, regardless
of whether a loss occurs
Pre-Loss Objectives - answer✔✔-Prepare for potential losses in the most economical way
-Reduce anxiety
-Meet any legal obligations
Post-Loss Objectives - answer✔✔-Survival of the firm
-Continue operating
-Stability of earnings
-Continued growth of the firm
-Minimize the effects that a loss will have on other persons and on society
Loss Frequency - answer✔✔the probable number of losses that may occur during some given
time period
loss severity - answer✔✔the probable size of the losses that may occur
Which is more important?
Loss severity or Loss Frequency - answer✔✔Loss Severity
maximum possible loss - answer✔✔the worst loss that could happen to the firm during its
lifetime
probable maximum loss - answer✔✔the worst loss that is likely to happen
Risk Control - answer✔✔techniques that reduce the frequency or severity of losses
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