diversifiable risk different activities w/ different levels of risk
non diversifiable risk no way of getting rid of the risk. Ex: natural disaster
Fundamental risk effects many exposure units at the same time
particular risk effects one exposure unit at a time
9 major duties of risk managers buy insurance, identify risk, loss prevention, loss control, contract review, gov't compliance w/ safety issues, risk finance, claims management and litigation support, employee benefits
5 steps of Risk management process mission identification (goal), risk identification, risk analysis, consider alternatives, implement and monitor
hazard increases likelihood of losses/bad event. Applies to pure risks.
risk factor effects the likelihood/severity of a gain or loss
peril actual cause of loss
exposure item that's subject to loss.
difficulties w/ risk identification (world is changing) new laws, new discoveries, and changing societal attitudes
property exposures buildings, vehicles, $. They have a direct and indirect result
liability exposure someone else has experienced a loss and now they're suing the person who's fault it was
Human Resource Exposures costs relating to employees
Bailed property Non-owned: repair shop. Give them your computer.
Leased Property Non-owned: things you rent
Property on Consignment Non-owned: property someone owns and another person is trying to sell it for them
Employee's property Non-owned: employees bring their own things of value to work, to use
property under lien Non-owned: You owe someone money so if you don't pay in time, they will get something of yours so that they can sell it for the money you owe them.
agency relationship non-owned: condo's for example. Run like a gov't, have a board to set rules and buy insurance and stuff for the whole agency (condo)