1. What is risk?
Intangible hazards
Attitudes are examples of which type of hazard?
Moral hazard
Behavioral changes because of something. "I'm insured so I'm not going to lock my house" When behavior changes it's a hazard
Liability risks
Being held responsible for your actions or in-actions. Example would be people getting hurt on your property
Speculative risk
Could lose something or you could gain something. A good example is buying stock. Have the chance to make money, or lose money
Peril
The immediate cause of loss
Risk
Uncertainty regarding loss
Hazard
Condition affecting frequency or severity of loss
True
Danger is not the same thing as risk
Uncertainty
Doubt about our ability to predict future outcomes. Can differ across individuals even when risk is the same. Information can alter it and reduction in it can be a good thing
Expected value (loss)
Frequency x Severity
Pure risk
Have no chance of gain. You either have a loss or no loss
Severity/Impact
How bad is it when it happens. "How bad is that injury when it happens"
Standard deviation
How far from what we expected to happen was our outcome
Frequency/likelihood
How often things happen. "How many times will you be injured in your lifetime"
Risk neutral
Indifferent toward risk. Value of risky situation is expected loss. Probability and outcome. Expected value is important to these people
Societal hazard
Legal or cultural changes are examples of which type of hazard?
Burden of risk on society
Need for larger emergency funds. Loss of needed goods and services. Fear and worry
Exposure
Person or property facing risk of loss
Risk Seeker
Prefer risk. Would pay more than expected return to engage in risky situation
Risk averse
Prefer to avoid risk. Willing to pay more than expected loss to avoid risk. Most people are this
Physical hazards
Property conditions are an example of which kind of hazard?
Property risks
Risk on things you own such as houses, cars, cell phones, music library, etc.
Fundamental risk
Risk that affects everyone. Such as a stock market crash
Particular risk
Risk that only affects a very small number of people
Secondary risk
Risk where companies partake in activities that aren't in their primary business. Such as pension plans for employees
Dynamic risks
Risks that are changing through time. Such as identity theft becoming more of a risk due to enhanced technology
Static risk
Risks that are unchanging through time
Core risk
Risks usually with business. What risks does the business have to take to further business. Ex. Delta traveling passengers and having a plane crash
Risk Impact
The potential effect that a loss could have if it arises. The magnitude also can be categorized as high, medium and low
Personal risks
Things that effect your life, health, happiness, welfare, etc. Effect you individually
Society's risk
Uncertainty regarding loss that effects a large portion of their population
Organization's risk
Uncertainty regarding loss when that lost amount will have a material effect on their business