Exam (elaborations)
RMIN 4000 Exam Questions and Answers 2024
- Course
- Institution
Exam of 11 pages for the course RMIN 4000 UGA at RMIN 4000 UGA (RMIN 4000 Exam)
[Show more]
Content preview
RMIN 4000 ExamExposures - answer Things of value (assets) that could be lost
Perils - answer Bad things that could happen to assets/Causes of loss
Risk Management - answer Things we do to protect our assets and/or prevent/reduce
losses
Risk - answer Uncertainty concerning the occurrence of a loss
Probabilistic Outcome - answer Chance of loss/Likelihood of loss
What does 0% to 100% mean, when understanding probabilistic outcome? What is the
highest risk? - answer0% = No Risk
100% = A certain Event
50% = Highest Risk because it has the most uncertainty
Negative outcome - answer A loss that must be quantifiable ($)
Frequency - answerHow often a loss occurs within a specified time period
Severity - answerThe dollar amount of loss for a specific peril (How much a loss cost)
Frequency Equation - answerFrequency = number of losses/number of exposures
Severity Equation - answerSeverity = total losses ($)/number of losses
Lannister Insurance company insures 100,000 homes. In 2021, they paid a total of
$30,000,000 in wind damage losses to the owners of 5,000 of those homes.
1. What was Lannister's wind loss frequency in 2021?
2. What was Lannister's average wind loss severity in 2021? - answer1. 0.05 --> 5%
2. 6,000
Hazard - answerCondition that increases the frequency and/or severity of a loss
- Does not cause a loss
Four types of hazards - answerphysical, moral, morale (attitudinal), legal
, Physical hazard & Example - answerA physical condition that increases the frequency
and/or severity of a loss
Example: Rain on the road
Moral Hazard & Example - answerDishonesty or character defects in an individual that
increase the frequency and/or severity of a loss
Example: Exaggerating the value of insured property
Morale (Attitudinal) Hazard & Example - answerCarelessness or indifference to a loss,
which increases the frequency and/or severity of a loss
Example: Leaving car keys in an unlocked car
Legal Hazard & Example - answerCharacteristics of legal system or regulatory
environment that increases the frequency and/or severity of a loss
Example: Georgia requiring Diminution in value to be paid on property losses
Pure risk - answerA risk where there is no gain - outcomes are either loss/no loss
Speculative risk - answerA risk where there is a chance of gain - outcomes are either
loss, no loss, or gain
Can you buy insurance for pure risks? - answerYes
Can you buy insurance for speculative risks? - answerNo
Examples of pure risk - answerFire, Cancer, Dog bites for a visitor
Examples of speculative risk - answerInvestment, Gambling, Drinking
Diversifiable Risk - answerA risk that affects only individuals or small groups, not the
entire economy
How can diversifiable risks be reduced? - answerVia diversification
Are the risks in diversifiable risk correlated? Give some examples of diversifiable risk -
answerNo - fire, theft, collision
Nondiversifiable Risk - answerRisks that affects the entire economy or large numbers of
groups/persons within the economy
Can nondiversifiable risks be reduced/eliminated via diversification? - answerNO
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller julianah420. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
72042 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now