chapter 1 review questions Flashcards
A condition that increases the chance of loss is called a(n)
hazard
A publishing company solicits manuscripts for publication. The publishing company is concerned that an author might plagiarize material and that the person who was plagiarized might sue the publisher. To address this risk, the contract with the author includes a hold-harmless agreement. Through this agreement, the author, rather than the publisher, is held liable for plagiarism. In this situation, the publisher is using the hold-harmless agreement as what type of risk treatment measure?
risk transfer
A risk that affects the entire economy, or a large number of persons or groups within the economy, is called a(n)
nondiversifiable risk
All of the following are burdens of risk on society EXCEPT
risk forces individuals to practice loss control
Dean’s Discount Store has been experiencing problems with shoplifting losses. Dean decided to install a camera monitoring system and to use magnetic tags on some products. If a tag is not demagnetized before the product bearing the tag leaves the store, an alarm bell sounds. These measures are examples of
loss prevention
An individual may commit an act that results in bodily injury or damage to someone’s property. A court of law may order the person responsible for the wrongful act to pay damages to the party who was injured. This type of risk is called the
liability risks
Kyle opened a sporting goods store. After a fire damaged the store, Kyle was forced to close the business for four weeks while repairs were completed. The loss of profits that could have been earned if the business had remained open is best described as a(n)
indirect (consequential) loss
The relative variation between expected losses and actual losses is called
objective risk
Which of the following statements is (are) true with respect to pure risks?
I. Pure risks may produce either a profit or a loss.
II. Premature death and damage to property caused by a fire are pure risks.
2 only
Which of the following statements is (are) true with respect to hazards?
I. Many physical hazards can be reduced through risk control measures.
II. Attitudinal hazard is more serious than moral hazard.
1 only
