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Ch. 1 Introduction to Risk Management
Terms in this set (26)
A set of characteristics common to all risks in a portfolio
The use of technological devices in vehicles with wireless communication and GPS tracking that transmit data to businesses or government agencies; same return info for driver
Obtaining information through language recognition
The potential for a major disruption in the function of an entire market or financial system.
Cost of risk
The total cost incurred by an organization because of the possibility of accidental loss.
Total cost of risk
total of these: 1. cost of accidental losses not reimbursed by insurance or other outside sources
2. insurance premiums or expenses incurred for non-insurance indemnity
3. costs of risk control techniques to prevent or reduce the size of accidental losses
4. cost of administering risk management activities
Value at Risk (VaR)
A threshold value such that the probability of loss on the portfolio over the given time horizon exceeds this value, assuming normal markets and no trading in portfolio
Condition that presents a possibility of gain or loss. Whether or not an actual loss occurs.
Frequent fluctuations, such as price of an asset.
Law of large numbers
A mathematical principle stating that as the number of similar but independent exposure units increases, the relative accuracy of predictions about future outcomes (losses) also increases.
Relationship between variables
change of loss or no loss, but no chance of gain
a chance of loss, no loss, gain
customers will fail to make promised payments
Perceived amount of risk based on individual's or organization's opinion
The measurable variation in uncertain outcomes based on facts and data.
A risk that affects only some individuals, businesses, or small groups
A risk that affects a large segment of society at the same time
Uncertainty in an investment's future value, changes in market
Risk that an asset cannot be sold on short notice without incurring a loss
Hazard risk quadrant
arise from property, liability, or personnel loss exposures. Subject of insurance.
Operational risk quadrant
fall outside Hazard Risk category and a rise from people or a failure in processes, systems, controls
Financial risk quadrant
effect of market forces on financial assets or liabilities + includes market risk, credit risk, liquidity risk, price risk
Strategic risk quadrant
trends in economy and society, changes in economical, political, and competitive environments + demographic shifts
Enterprise risk management
approach to managing all of an org's key business risks and opportunities with intent of maximizing shareholder value
THIS SET IS OFTEN IN FOLDERS WITH...
Ch. 2 Risk Management Standards and Frameworks
Ch. 3 Hazard Risk
Ch. 5 Risk Management Framework and Process
Ch. 6 Risk Identification
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OTHER SETS BY THIS CREATOR
Ch. 11 Monitoring and Reporting on Risk
Ch. 9 Big Data Analytics for Managing Risk
Ch. 8 Risk Treatment
Ch. 7 Risk Analysis