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IF1 - C1 - Risk and insurance - the natures of risk correctly answered
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IF1 - C1 - Risk and insurance - the natures of risk correctly answered
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IF1 - C1 - Risk and insurance - thenatures of risk correctly answered
What will you learn about the natures of risk? - correct answer ✔✔- the concepts of risk and the process
of risk management
- the different categories of risk and which risks are insurable
- the components of risk
what is meant by risk-averse? - correct answer ✔✔people who prefer to minimize the risks they are
exposed to - reduce risks - transfer risk e.g. to insurers
what is meant by risk seeking? - correct answer ✔✔they prefer/ or are willing to carry the risk
themselves - retain the risk
How does insurance act as a risk transfer mechanism? - correct answer ✔✔the insured exchanges a large
unknown financial risk for a smaller premium, bringing them peace of mind
e.g. insured pay premium (risk transferred) ------> to insurer
What are the 3 stages of risk management? - correct answer ✔✔identification
analyse
control
What is risk identification? - correct answer ✔✔involves discovering threats for the company existing
and potential threats
for those risks that are to be insured an insurance company may help at this stage by conducting a
survey to establish the threats/risks
, What is risk analysis? - correct answer ✔✔risk managers will use past data to assess the level of risk the
company might be exposed to
What is risk control? - correct answer ✔✔elimination is the most effective form of risk control
if that is not feasible, then over ways are:
- physical control measures - taking measures to decrease the likelihood of a feared event happening
- financial control measures - transferring the risk to another by insurance or by contract
- developing a good risk culture - to improve risk awareness and mange the risk
what is a corrective control? - correct answer ✔✔designed to right errors or irregularities that have been
spotted
what is a detective control? - correct answer ✔✔designed to spot errors or irregularities that have
occured
preventive controls? - correct answer ✔✔designed to keep errors or irregularities from happening
Why is risk control important? - correct answer ✔✔insurers assist in the area of loss prevention and
control by making recommendations to firms as to how to minimise their risks using the measures
shown
What is MIAFTR? - correct answer ✔✔MIAFTR (motor insurance anti fraud and theft register) records all
details of vehicles and motorcycles that become total losses arising from any cause, including fire and
theft. Third party and insured losses are also recorded, and the information is available to all companies
as well as the Lloyd's Corporation.
how does the MIAFTR work? - correct answer ✔✔Insurers that place information onto MIAFTR relating
to a new claim will be advised if the vehicle, claimant or the claimant's address matches existing data
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