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FIL 250 Chapter 3

Risk Control

QuestionAnswer
Risk control a technique that is aimed at reducing losses of an organization by targeting the frequency or severity of losses or speeding recovery of operations
Avoidance a risk control technique where an organization decides to not engage is an activity which has some type of loss exposure. It eliminates any losses from that activity
Loss prevention A risk control technique aimed at reducing the frequency of loss. An example would be a training program for employees to help reduce the incidence of workplace injury
Loss reduction A risk control technique aimed at reducing the severity of losses that occur. These techniques can be initiated both before the loss (sprinkler system) or post-loss (execute business continuity plan)
List six risk control techniques avoidance, loss prevention, loss reduction, duplication, separation, diversification
Separation A risk control technique that physically divides assets to minimize the impact of a single loss event and to help continue operations.
Duplication a risk control technique that uses backup copies or spares of important property of information. The backup replaces the original in case of loss
Diversification A risk control technique to spread loss exposures across several different products, markets, or locations.
What are the four major goals of risk control? 1. Implement effective and efficient measures (choose techniques that reduce losses and are cheaper) 2. Comply with legal requirements 3. Promote life safety 4. Ensure business continuity
Life safety Based on the occupancy of a building, these are required construction, operation, and maintenance requirements to assure that people have a safe exit in the event of a fire
What does the acronym "COPE" stand for? Used for assessing (and perhaps reducing) property risk, COPE is: Construction Occupancy Protection (internal and external) Environment (neighboring property)
What are the six steps to the business continuity process? 1. identify critical functions 2. identify risks/threats to critical functions 3. evaluate impact to critical functions 4. develop a continuity strategy 5. develop a business continuity plan 6. monitor and revise
Which three risk control techniques are most useful for liability exposures? avoidance, loss prevention, and loss reduction
proactive avoidance before the fact, choosing not to engage in a venture that has risk
reactive avoidance abandonment of risky activities, often after experiencing significant losses
engineering approach to risk control uses elements of design and technology in an effort to minimize losses and hazards (e.g., air bags in cars)
human behavior approach to risk control seeks to understand and modify existing behaviors of people in an effort to reduce losses (e.g., training program)
premises liability liability that occurs at a business's location, such as customers slipping on a floor in a retail store
operations liability liability that arises from the normal activities of a business such as property damage and/or bodily injury (e.g., auto liability by delivery personnel is an example)
completed operations liability liability that arises after work has been completed for customers, such as an improperly installed plumbing fixture that causes property damage
products liability liability that arises due to the defect of distributed goods
workers compensation liability liability that arises from employee injuries while performing their job
professional liability liability incurred by professionals, such as lawyers or accountants, who don't exercise the higher standard of care toward others as required by their occupation
management liability liability incurred by managers and their employers as a result of engaging in wrongful acts that injure shareholders, employees, or others
Created by: isufil250