UGA RMIN 4000 Edmunds Exam 1 Latest Questions With Passed Solutions!!
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UGA RMIN 4000 Edmunds
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UGA RMIN 4000 Edmunds
Legal Hazard - ️️characteristics of the legal system or regulatory environment that
increase the frequency or severity of losses (a jury in one district may be more
sympathetic than others)
property risk - ️️possibility of losses associated with the destruction or theft of
property (can...
UGA RMIN 4000 Edmunds Exam 1
Legal Hazard - ✔️✔️characteristics of the legal system or regulatory environment that
increase the frequency or severity of losses (a jury in one district may be more
sympathetic than others)
property risk - ✔️✔️possibility of losses associated with the destruction or theft of
property (can be direct or indirect-financial loss result of direct loss)
what are some risk control tactics? - ✔️✔️loss prevention (employee training or safety
equipment to reduce frequency), loss reduction (sprinkler heads for fires to reduce
severity) , duplication, separation, diversification, and avoidance (never acquire loss
exposure (proactive) or abandon loss (reactive))
risk - ✔️✔️uncertainty concerning the occurrence of a loss (or calculated possibility of a
negative outcome)
loss exposure - ✔️✔️any situation where a loss is possible (does not have to occur)
loss frequency - ✔️✔️how often a loss occurs within a specific period (probability)
formula to find frequency - ✔️✔️# of losses/# of exposures
loss severity - ✔️✔️how much does a loss cost when it occurs (a house fire costs $x)
formula to find severity - ✔️✔️total losses in dollars/# of losses
Peril - ✔️✔️cause of loss (fire, windstorm, flood)
Hazard - ✔️✔️an event that creates or increases the chance of a loss without causing
At what probability is risk highest? - ✔️✔️0.5
Do risk and chance of loss mean the same? - ✔️✔️No, chance of loss is the probability
that an event will occur
What are the four types of hazards? - ✔️✔️Physical, Moral, Morale, and Legal
Physical hazard - ✔️✔️a physical condition that increases the frequency or severity of
loss
, moral hazard - ✔️✔️dishonesty or character defects in an individual that increase the
frequency or severity of loss (using a hammer to create "hail" damage to your roof to get
a claim)
Morale (Attitudinal) Hazard - ✔️✔️carelessness or indifference to a loss, which
increases the frequency or severity of a loss (leaving car unlocked leading to theft)
pure risk - ✔️✔️a risk with a possibility of loss or no loss; no gain occurs
speculative risk - ✔️✔️A chance of loss, no loss, or gain
diversifiable risk - ✔️✔️a risk that affects only individuals or small groups and not the
entire economy
nondiversifiable risk - ✔️✔️a risk that affects the entire economy or large numbers of
persons or groups within the economy (war, inflation, business recession)
what makes a risk diversifiable or not? - ✔️✔️it is diversifiable if it can be reduced or
eliminated by diversification
enterprise risk - ✔️✔️encompasses all major risks faced by a business firm
systemic risk - ✔️✔️the risk that the failure of one financial institution can bring down
other institutions as well
What are the major types of pure risk? - ✔️✔️personal, property, and liability
personal risk - ✔️✔️A risk that directly affects an individual or family (peril, like
unemployment, causes loss of income)
legal liability risk - ✔️✔️financial consequences from injuries or damages you caused
to someone else (defense costs; liens on income or assets seized as punishment)
What are the techniques of managing risks? - ✔️✔️risk control and risk financing
risk control - ✔️✔️techniques that reduce the frequency or severity of losses
risk financing - ✔️✔️techniques for funding losses
what are some risk financing tactics? - ✔️✔️retention (retaining part or all of losses
from a risk), noninsurance risk transfer (risk is given to party other than insurance
company), and insurance (transfer risk to insurer in exchange for a premium cost)
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