Intro To Risk Management Flashcards
(22 cards)
Term
Definition
Risk
The possibility of a positive or negative outcome arising from a given set of circumstances.
Pure Risk
A risk that presents only the possibility of loss or no loss (e.g., fire, accident).
Speculative Risk
A risk that involves the possibility of gain or loss (e.g., investments, new product launches).
Loss
A decrease in the value of an asset due to damage, injury, or loss of use.
Exposure
A situation, condition, or asset that could result in a loss.
Peril
The direct cause of a loss (e.g., fire, theft, accident).
Hazard
A condition that increases the likelihood or severity of a loss (e.g., wet floors).
Incident
An unplanned event that may or may not result in a loss.
Accident
An unplanned, sudden event that results in damage or injury.
Occurrence
An accident or loss event that happens over time.
Claim
A demand for payment due to a loss.
Frequency
The number of times a loss occurs in a given period.
Severity
The financial impact or cost of a loss.
Expected Losses
Predicted loss frequency and severity based on history and statistics.
Risk Management
The process of identifying, analyzing, controlling, financing, and administering risks.
Risk Identification
Finding potential exposures to loss.
Risk Analysis
Evaluating the impact and likelihood of identified risks (qualitative and quantitative).
Risk Control
Actions taken to minimize the frequency or severity of loss (e.g., prevention, reduction).
Risk Financing
Providing funding to cover losses (e.g., insurance, retention).
Risk Administration
Implementing and monitoring risk management practices.
Total Cost of Risk (TCOR)
The sum of all costs related to risk including insurance, retentions, admin, services, and indirect costs.
