Exam (elaborations)
RMIN 4000 UGA test 1 2024 Questions and Answers 100% Solved
- Course
- Institution
RMIN 4000 UGA test 1 2024
[Show more]
Content preview
RMIN 4000 UGA test 1 2024What is risk? - answer a calculated possibility of a negative outcome
What is calculated possibility? - answer a probabilistic outcome that is known or
estimated (ranges from 0% to 100%)
What is a negative outcome? - answer a loss that must be quantifiable
What is frequency? - answer how often a loss occurs (frequency= number of losses /
number of exposures)
What is severity? - answer How much a loss costs when it occurs (severity = total
losses ($) / number of losses)
What is a peril? - answera cause of a loss (fire, tornado, collision)
What is a hazard? - answera condition that creates to increases the frequency and/or
severity of a loss but does not cause the loss
What are the four types of hazards? - answer- physical
- moral
- morale
- legal
What is a physical hazard? - answera physical condition that increases the frequency
and/or severity of a loss (corrosion on pipes, too many wires plugged in to an outlet)
what is a moral hazard? - answerdishonesty in an individual that increases the
frequency or severity of a loss. the presence of insurance changes the behavior of the
insured (causing "hail" damage with a hammer)
What is a morale hazard? - answercarelessness or indifference to a loss, which
increases the frequency and/or severity of a loss (leaving the car keys in your unlocked
car)
What is a legal hazard? - answercharacteristics of the legal systems or regulatory
environment that increase the frequency and/or severity of a loss (juries being more
sympathetic in some areas)
What is a pure risk? - answera risk in which there is no gain. the outcomes are either
loss or no loss
, what is speculative risk? - answera risk in which there is a possibility for gain. the
outcomes are either loss, no change, or gain.
What is the difference between pure and speculative risk? - answerwith speculative risk,
there is a chance of gain, whereas there is no chance for gain with pure risk
can you buy insurance for pure risks? - answeryes
can you buy insurance for speculative risks? - answerNo
What is diversifiable risk? - answera risk that affects only individuals or small groups,
not the entire economy. risk is not correlated
How do you reduce/eliminate diversifiable risk? - answerdiversification
What is nondiversifiable risk? - answera risk that affects the entire economy or a large
group of people. this cannot be reduced/eliminated through diversification. this risk is
correlated.
What is enterprise risk? - answerencompasses all major risks faced by a business firm:
- pure risk
- speculative risk
- strategic risk
- operational risk
- financial risk
What is systemic risk? - answerthe risk of collapse of an entire system or market due to
failure of a single entity or group of entities that can result in the breakdown of the entire
financial system. this is due to the interdependency between the players in the system
What are the major types of pure risk? - answer- personal risk
- property risk
- liability risk
- loss of business income
- cyber security
What is personal risk? - answera risk that directly affects an individual or family;
involves the possibility of loss of income, extra expenses, or depletion of financial
assets (death, unemployment, disability, injury, inadequate retirement income)
What is property risk? - answerthe possibility of losses associated with the destruction
or theft of property
What is a direct loss? - answerthe cost to repair or replace property damaged by a peril
(money paid to fix your flooded basement)
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 $13.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79373 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now