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Categories of Risk
Loss Exposures
Categories of Risk Control Techniques
Risk Financing Measures
Characteristics of Insurance Policies
100
This risk involves the possibility that customers and other debtors may fail to make promised payments.
What is Credit Risk?
100
A condition that presents the possibility that a person or an organization will sustain a loss resulting from damage (including destruction, taking, or loss of use) to property in which that person or organization has a financial interest.
What is Property Loss Exposure?
100
A risk control technique that isolates loss exposures from one another to minimize the adverse effect of a single loss.
What is Separation?
100
A group of organizations that band together to insure each other’s loss exposures.
What is a Pool?
100
Something of value or bargained for and exchanged by the parties to a contract.
What is Consideration?
200
Some examples of this quadrant of risk include embezzlement, kidnap, service provider failures, and supplier business interruption.
What is Operational Risk?
200
Any condition or situation that presents the possibility of a claim alleging legal responsibility of a person or business for injury or damage suffered by another party.
What is Liability Loss Exposure?
200
A risk control technique that uses backups, spares, or copies of critical property, information, or capabilities and keeps them in reserve.
What is Duplication?
200
A workers' compensation plan with a deductible of at least $100,000 that allows the insured to self-insure most of its workers compensation claims without establishing a qualifying self-insurance plan. The insurer provides administrative and claim services and the employer reimburses the insurer for any losses under the deductible.
What is a Large Deductible Plan?
200
Losses that happen accidentally or unexpectedly.
What are fortuitous losses?
300
This type of risk is a chance of loss or no loss, but no chance of gain.
What is Pure Risk?
300
Any condition or situation that presents the possibility of a financial loss to an individual or a family by such causes as death, sickness, injury, or unemployment.
What is Personal Loss Exposure?
300
A risk control technique that involves ceasing or never undertaking an activity so that the possibility of a future loss occurring from that activity is eliminated.
What is Avoidance?
300
A form of retention under which an organization records it losses and maintains a formal system to pay for them.
What is Self-Insurance?
300
Any contract in which one party must either accept the agreement as written by the other party or reject it.
What is a Contract of Adhesion?
400
Many of these risks are transferred by property-liability insurance policies. Insurance for some of these risks, such as workers’ compensation, may be mandated by law.
What are Hazard Risks?
400
A condition that presents the possibility of loss caused by a reduction in net income.
What is Net Income Loss Exposure?
400
A risk control technique that spreads loss exposures over numerous projects, products, markets, or regions.
What is Diversification?
400
An insurance policy in which the premium and limits are specified in advance.
What is Guaranteed Cost Insurance?
400
To limit overindemnification, most property and liability insurance policies contain clauses called “____________” these that limit multiple sources of recovery.
What is "Other Insurance Provisions"?
500
Examples of this type of risk include inflation, unemployment, and natural disasters such as hurricanes.
What are Nondiversifiable risks?
500
A condition that presents the possibility of loss caused by a person's death, disability, retirement, or resignation that deprives an organization of the person's special skill or knowledge that the organization cannot readily replace.
What is Personnel Loss Exposure?
500
A risk control technique that reduces the severity of a particular loss.
What is Loss Reduction?
500
A risk financing plan that transfers a limited amount of risk to an insurer.
What is a Finite Risk Plan?
500
Insurance policies are sometimes referred to as “personal contracts” to indicate their _________________ or _________________________ nature.
What is nontransferable and nonassignable?