Risk quiz #2

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Risk quiz #2
2014-03-18 23:46:11
risk quiz chapters

risk quiz 2
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  1. Decision
    making process to manage pure risk events or activities facing firms or individuals.
  2. ERM
    a mixture of pure and speculative risk. (risk within the enterprise) (not siloed)
  3. Decision making process
    to manage pure risk events or activities facing firms or individuals.
  4. What are the 6 steps of the rm process
    • 1. identification step
    • 2. measure+evaluate the exposures to loss
    • 3.identify possible rm options
    • 4.select from among various rm options(select one or more)
    • 5.implement the chosen options
    • 6.periodically re evaluate chosen strategies
  5. identification step
    • the first step in the rm process.
    • identify exposures to loss
  6. measure and evaluate the exposures to loss
    • 2nd step in rm process
    • measure the freq.,severity and probability of a loss
  7. identify possible rm options
    • 3rd step in rm process
    • consists of risk control options(training programs) and risk financing options(insurance)
  8. select from among various risk mgmt options
    4th step in rm process
  9. implement the chosen option
    5th step in rm process
  10. periodically re evaluate the chosen strategies
    6th step in rm process
  11. What are the 8 methods of exposure identification?
    • financial statement approach
    • survey or questionnaires
    • physical inspections
    • ask employees and managers in the firm
    • contract analysis
    • ask firms in the same industry
  12. financial statement approach
    • 1st method of exposure identification
    • check riskiness of cash flows, and the uses of revenues etc.
  13. survey or questionairres
    2nd method of exposure identification
  14. physical inspections
    • 3rd method of exposure identification
    • "walk arounds"
  15. ask employees and managers in the firm
    4th method of exposure identification
  16. look at past information
    5th method of exposure identification
  17. contract analysis
    • 6th method of exposure identification
    • hold harness agreements 
    • leases
  18. hold harness agreement
    person holding property is liable while your property is in their care(iphone repair)
  19. flow chart approach
    7th method of exposure identification
  20. ask firms in the same industry
    8th method of exposure identification
  21. rims
    risk management and insurance society
  22. exposure to loss
    • possibility of financial loss
    • that a particular entity faces
    • result of a particular peril
    • thing of value exposed to loss
  23. what are the 4 types of loss exposures?
    • property
    • liability
    • net income
    • personnel
  24. property loss exposure
    • legal interest in property
    • financial stake in property
    • if there is a loss to it you also suffer a loss
  25. 4 types of risk in erm?
    • hazard
    • operational
    • financial
    • business/strategic
  26. what are the sources of legal interest in property?
    • ownership interest
    • lease agreements
    • secured creditors
    • buyers and sellers
    • bailee interest
  27. bailee interest in property
    ex. repair shop,coat check, valet etc.
  28. buyer and seller interest in property
    fob point indicated by shipping agreements
  29. secured creditor interest in property
    ex. a bank buying insurance on your house
  30. net income exposures
    • ALWAYS caused by a primary loss.(ex fire)
    • primary loss causes a decrease in revenue and and increase in expenses.
  31. Is the cost of replacing a building a ni loss?
    no. It is a property loss.
  32. loss to property owned by others loss
    • can cause a ni loss.
    • ex. a key supplier causes a shutdown in your operations.
  33. legal liability losses
    ex. tylenol cyanide capsules.
  34. personnel loss exposures
    • decrease in revenue from the loss of a key employee
    • also causes a personal NI loss to the key employee
  35. trm deals with pure or speculative risks?
    Pure risks only
  36. 4 types of erm risks
    • hazard
    • operational
    • financial
    • strategic
  37. hazard risks
    • property,liability,health and safety, theft, fire , etc.
    • (pure and diversifiable)
  38. operational risk
    • arising from day to day operations
    • ex. product recalls, supply chain issues, customer service,turnover, discrimination etc.
  39. is every risk a financial risk?
  40. financial risks
    • arising from changing mkt conditions
    • ex. commodity prices, interest rates, debt rating etc.
  41. strategic/business risks
    • arising from swot analysis
    • ex. media coverage, union relations, intellectual property,etc.
  42. risk map
    • used to compare risks in an organization.
    • helps determine which risks deserve the most attention.
  43. pre loss goals(3)
    • Economy of operations
    • Tolerable uncertainty
    • legality
    • social responsibility
  44. post loss goals
    • survival
    • continuity of operations
    • profitability
    • earnings stability
    • social responsibility
    • growth
  45. elements of a loss exposure
    • asset exposed to loss
    • peril(cause of loss)
    • financial consequences of that loss
  46. real property
    tangible property consisting  of land, all structures permanently attached to the land.
  47. personal property
    all tangible or intangible property that is not real property.
  48. types of torts
    • negligence
    • intentional torts
    • strict liability torts
  49. strict liability
    liability imposed even though the defendant acted neither negligently nor with intent to cause harm.
  50. legal duty
    duty owed by a defendant to a plaintiff
  51. common law
    laws developed out of court cases and set precedents.
  52. Where is the insurance fraud capital of america?
  53. TRM mainly deals with______risk events.
  54. H. Wayne snyder
    a professor at temple that put together the idea of managing risk
  55. In the 1960's did firms typically manage risk?
    no, they just purchased insurance
  56. What is the most important step in the rm process and why?
    the identification step because failure to identify risks can lead to bankruptcy.
  57. What are examples of risk control options that reduce frequency of losses?
    safety and training programs
  58. What are examples of risk control options that reduce severity of losses?
    rehabilitation of injured workers.
  59. What are the two main risk financing options?
    buy insurance or budget for losses
  60. Who contributed 15 million dollars to build alter hall
    Dennis alter
  61. soft market
    insurance on sale and insurers are not that picky about customers. often very cheap
  62. Hard Markets
    Tough underwriting standards make getting insurance tough and the insurance is very expensive.
  63. What is an example of a hard marketplace?
    The medical Malpractice market.(especially jersey)
  64. RIMS
    Risk and insurance management society
  65. URMIA
    University risk mgmt and insurance association.
  66. PRIMA
    Public risk management association (septa,school districts etc.)
  67. ASHRM
    Healthcare risk mgmt
  68. 4 dimensions of a loss exposure(IMPORTANT)
    • possibility of a financial loss
    • that a particular entity faces
    • as the result of a particular peril
    • striking a particular thing of value
  69. In ERM risks are called_____
    loss exposures
  70. Property loss exposures
    entity or person must have a legal interest in property that is exposed to a loss
  71. legal interest in property
    • a financial stake in a property
    • If the property suffers a loss, you also suffer a loss
  72. Sources of legal interest in property
    • ownership interest
    • Use interest (if you have a lease and have the obligation to return without damage)
    • Leasehold interest (if the lease is <fair market value)
  73. If the FMV is > rent who has the leasehold interest?
    renter has leasehold interest
  74. If the FMV is > rent who has the leasehold interest?
    owner has leasehold interest
  75. What is forced placement?
    When the bank purchases an insurance contract for the owner of the property.
  76. FOB point
    The point in which the financial responsibility shifts from seller to buyer.
  77. Inland marine insurance(also known as ocean marine insurance)
    1st type of insurance ever developed
  78. What about losses to property while a bailee has it?
    Financial responsibility goes to the bailee