E- Finance CH6 Flashcards
What is risk management
Identify and assess it’s exposure to different types of risks and develop measures to minimize the losses
What is the process of risk management
- Identify risk
- Measure risk
- Control risk
What are the type of risks
- Pure risk - loss or no loss
- persona; risk
- property risk
- liability risk - Speculative risk - loss or gain
e.g interest risk , exchange currency risk
What conditions can satisfy insurable risk
- Risk must be accident
- Must not be non-speculative
- Must not be predicted
- Suffering of loss should not be too great
- Occurance must not be too frequent
What are the impacts of risk on businesses
- Personal injury
- Loss of property
- Legal liability
- Loss of profits
What are the types of risk management strategies
- Risk avoidance
- Risk assumption
- Risk reduction
- loss prevention: reduce loss frequency
- loss reduction: reduce loss severity - Risk transfer
Ways of choosing risk management
- Risk avoidance
- should be the last resort - Firms should reetain some risks
- because risk reduction and transfer is expensive - Firms should strike a balance between different strategies
What are the different insurance for businesses
- Motor insurance
- Fidelity guarantee insurance
- Liability insurance
- Insurance policies mix for businesses
What is motor insurance and the types of motor insurances
Protects drivers and thrid party against loses from thefts and accidents
- Third party insurance for automobiles
- Comprehensive insurance
What fidelity guarantee insurance
Provide employers with compensation if lose money due to dishonest act of employee
What is liability insurance and the types
Provides protection against liability risk
- Public liabilities insurance
- injure third parties - Employees compensation insurance
- medical expenses and financial compensation due to death or injury
What is insurance mix policies for businesses
A combination of property insurance and liability insurance
