Rmin 4000 ch 3
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
Help!
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| Risk Management | show 🗑
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| show | Any situation or circumstance in which a loss is possible, regardless of whether a loss actually occurs
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| show | 1. Identify loss exposures.
2. Measure and analyze the loss exposures.
3. Consider and select the appropriate risk management techniques.
4. Implement and monitor the chosen techniques.
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| 1. Identify loss exposures. | show 🗑
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| show | Estimate the frequency and severity of loss exposures.
Rank loss exposures according to relative importance.
Severity is more important.
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| show | the worst loss that could happen to the firm during its lifetime.
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| Probable Maximum Loss | show 🗑
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| Risk Control: | show 🗑
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| show | techniques that provide for the funding of losses.
- Retention, noninsurance transfer, insurance
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| 4. Implement and monitor the chosen techniques. | show 🗑
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| show | loss exposure is never acquired (proactive), or an existing loss exposure is abandoned (reactive).
Advantage: frequency is reduced to 0.
Disadvantage: may not be possible, has an opportunity cost, avoiding one loss exposure may create another
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| Loss prevention | show 🗑
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| show | measures that reduce the severity of a loss.
No effect on the frequency of a loss
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| Duplication | show 🗑
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| Separation | show 🗑
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| Diversification | show 🗑
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| show | a firm or individual retains part or all of losses that can occur from a given risk (keep the loss to yourself)
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| show | the dollar amount of losses that the individual/firm will retain (have to pay)
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| When should risk be retained? | show 🗑
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| Retention Advantages: | show 🗑
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| show | Possible higher losses,
Possible higher expenses,
Possible higher taxes
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| Unfunded Retention: | show 🗑
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| Funded Reserve | show 🗑
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| Captive Insurer: | show 🗑
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| Captive Insurer Advantages: | show 🗑
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| show | a special form of planned retention by which part or all of a given loss exposure is retained by the firm, up to a certain amount (funded reserve)
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| show | group captive that can write any type of specific liability coverage except employers' liability, workers compensation.
Collect money from a group of people, and pays out if someone needs it
Ex: medical liability from doctors being sued
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| show | methods other than insurance by which a pure risk and its potential financial consequences are transferred to another party.
Ex: contracts, leases, hold-harmless agreements
Ex: bungee jumping life waver, housing contracts
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| show | Can transfer some losses that are not insurable.
Less expensive,
Can transfer loss to someone who is in a better position to control losses,
Sometimes insurance don't cover certain losses
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| Noninsurance Transfer Disadvantages: | show 🗑
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| Insurance | show 🗑
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| show | A plan in which the insurer pays only if the actual loss exceeds the amount a firm has decided to retain (coverage beyond the umbrella max insurance payout)
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| show | A policy specially tailored for the firm
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| Insurance Advantages: | show 🗑
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| Insurance Disadvantages: | show 🗑
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| show | insurer profitability is declining, underwriting standards are tightened, premiums increase, and insurance is hard to obtain.
Might have to increase retention, less coverage
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| Soft Market | show 🗑
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Review the information in the table. When you are ready to quiz yourself you can hide individual columns or the entire table. Then you can click on the empty cells to reveal the answer. Try to recall what will be displayed before clicking the empty cell.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
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Created by:
aychan
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