Term
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Definition
| uncertainty about outcomes, some of which can be negative |
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Term
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Definition
focus on traditional risk management (TRM)
2 possible future states of the world
-loss
-no loss
examples of losses (most insurable)
-any natural disaster ie: flood, tsunami, earthquake
-death
-theft
-sickness
-fire |
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Term
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Definition
focus on enterprise risk management (ERM)
3 possible outcomes of the world
-loss
-gain
-no loss/gain
examples of loss (no insurance)
-investments, stocks
-gambling
-starting a new business
-developing a new product line |
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Term
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Definition
doesn't really change significantly over time.
always present: natural disasters, fire, flood, theft, death |
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Term
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Definition
new and emerging risks.
arise as a result of changing circumstances, laws, conditions: terrorism, internet risks, privacy risks, political risks, tax laws, health reform, compliance risk, fuel prices |
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Term
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Definition
the perceived amount of risk based on an individual's or organization's opinion.
an individual's attitude toward a situation involving uncertainty
-difficult to compare among individuals
-not easy to measure |
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Term
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Definition
| the measurable variation on uncertain outcomes based on facts and data |
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Term
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Definition
| differences in willingness to bear risk |
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Term
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Definition
| the thing that causes the loss. |
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Term
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Definition
| condition that increases the chance & /or size of the loss. |
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Term
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Definition
a condition of property, persons, or operations that increase the frequency and/or severity of a loss
ex: slip-and-fall accidents more likely to occur on icy sidewalk, fire more likely to start in building with defected wiring, explosion more likely to occur in a painting area that has inadequate ventilation |
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Term
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Definition
condition that increases the frequency and/or severity of loss resulting from a person acting dishonestly.
2 themes:
-presence of insurance contract
-behavior change |
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Term
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Definition
a condition that increases the frequency and/or severity of loss resulting from careless or indifferent behavior
ex: driving carelessly, failing to lock an unattended building, failing to clear sidewalk of ice for pedestrians
difference b/n moral hazard and morale hazard is intent. moral hazard = deliberate act. morale hazard = carelessness/indifference |
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Term
| physical hazard - location |
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Definition
| if peril is a flood, the property located in a flood zone is a physical hazard |
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Term
| physical hazard - construction |
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Definition
brick vs. wood frame construction
if peril is fire, wood frame structure would pose physical hazard. => impact on severity
if peril is earthquake, brick structure would pose physical hazard. => impact on severity |
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Term
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Definition
gathering places: university classroom building vs. building used as church
if peril is a fire, use as a church is a physical hazard. => impact on severity |
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