Chapter 14 Flashcards
(29 cards)
Risk
The possibility of loss, damage, or injury.
Natural risk
A situation caused by acts of nature.
Economic risk
A situation that occurs when business activities suffer due to changes in the US or world economy.
Market risk
The potential that the target market for new goods or services is much less than originally projected.
Human risk
A negative situation caused by the actions of people.
Risk management
The process of evaluating risk and finding ways to minimize or manage loss.
Controllable risks
Situations that cannot be avoided, but can be minimized by purchasing insurance or creating a risk management plan.
Uncontrollable risks
Situations that cannot be predicted or covered by purchasing insurance.
Pure risk
A risk with a possibility of loss, but no possibility of gain.
Speculative risk
A risk that can result in either financial gain or financial loss.
Insurance
A financial service used to protect against loss. Purchasing insurance transfers risk to the insurance company.
Uninsurable risk
One that an insurance company will not cover.
Insurance policy
Defines the type of losses that are covered, amount of coverage in dollars, and other conditions to which the two parties agree.
Premium
Amount insured pays for insurance coverage.
Claim
Process of documenting a loss against an insurance policy.
Deductible
Amount the insured is responsible for paying when a claim is made.
Cyber insurance
Covers loss incurred from cyberattacks, such as data breaches and computer viruses.
General liability insurance
Protects against financial losses that result from legal issues.
Product liability insurance
Protects against financial losses due to a product defect that may cause injury to the user of the product.
Professional liability insurance
Protects against finan
Commercial insurance
Liability insurance
Business interruption insurance
Fidelity bond
