| Term | Definition |
|---|
| Qualities of Information (10) | Accessible; comprehensive; accurate; appropriate; timely; clarity; flexible; verifiable; free from bias; quantifiable |
| Generic, Nondelegable Duties of a Risk Manager (4) | Risk Management Program; Risk Assessment; Risk Control; Risk Financing |
| Risk Control Techniques (6) | Avoidance, Prevention, Reduction, Separation, Duplication, Diversification |
| Benefits of Risk Management (2) | Reduces Cost of Risk and Reduces Deterrence Effects |
| Deterrence Effects | Potential Benefits and Profits missed by an organization by avoiding activities deemed too risk or not worth the cost of risk. |
| Management Functions (4) | Planning, Organizing, Leading and Controlling |
| Risk Management Process (6 steps) | Identifying, Analyzing, Examining Feasibility, Selecting, Implementing, and Monitoring (and revising) |
| Potential & Actual Accidental Loss Costs (3) | (1) Reduction in Property Value, Income, Earnings or Quality of Life; (2) Loss of Net Benefits (Deterrence Effects); (3) Cost of resources devoted to managing losses |
| Cost of Risk (4) | Accidental losses not reimbursed, Insurance premiums, Cost of Risk Control Techniques, Cost of Risk Management Administration |
| RMIS | Risk Management Information System - A fundamental Information Resource for the Risk Management Process |
| Other Definitions of "Risk" (5) | Subject of Insurance; The Applicant/Insured; Possibility of Loss or Injury; Cause of Loss/Peril; Variability of future outcomes |
| Traditional Risk Management | Primarily deals with accidental losses and negative consequences |
| Reasons for R/M Plan Revisions | Changes to Resources or Activities (NEW LOSS EXPOSURES AND EXISTING LOSS EXPOSURES BECOME SIGNIFICANT); Change in Costs of R/M Techniques (DIFFERENT R/M TECHNIQUES BECOME MORE APPROPRIATE); Changes in legal requirements; changes in organization's goals; changes in economical environment. |
| Differences between Enterprise (E) and Traditional (T) Risk Management (4) | 1. (E) Encompasses both hazard & business risks (T) Hazard Only; 2. (E) Seeks to fulfill greatest productive potential (T) seeks to restore to pre-loss condition; 3. (E) Focus on Value of Organization, (T) Focus on Value of Accidental Loss; 4. (E) Whole Organizational Focus, (T) Specific Loss Exposure Focus |
| Risk Management Benefits to Entire Economy (2) | 1. Reduced waste of resources (destroyed or allocated to risk management); 2. Improved allocation of productive resources (increase of overall productivity) When economic uncertainty is reduced, organizations are free to purse activities and maximize profits. |
| List (6) departments and the information they provide to the Risk Manager | 1. Accounting - Historical Costs and Replacement Cost Values; 2. Information Syhstems - Track loss exposures; 3. Legal - Advice on claims and procedures; 4. HR - ID essential employees and w/c issues; 5. Production - ID essential processes, equipment and key suppliers; 6. Marketing - ID product or service deficiencies that create liability |
| Types of Loss Exposures (4) | 1. Property Loss Exposures; 2. Liability Loss Exposures; 3. Personnel Loss Exposures; 4. Net Income Loss Exposures |
| Methods of Identifying Loss Exposures (7) | 1. Risk Assessment Questionnaires; 2. Loss Histories; 3. Financial Statements & Accounting Records; 4. Other records & documents; 5. Flowcharts and Org. Charts; 6. Personal inspections; 7. Expertise within and outside the organization |
| Five Dimensions of Loss Exposure Analysis (5) | Loss Frequency, Loss Severity, Total Dollar Losses, Timing, Data Credibility |
| Risk Financing Techniques (2 groups) | (1) Transfer - both insurance & noninsurance; and (2) Retention |
| Risk Transfer | A risk finance technique that includes insurance and noninsurance techniques to shift the financial consequences of loss to another party. |
| Risk Retention | A risk finance technique that involves absorbing the loss by generating funds within the organization to pay for loss. |
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