Entrepreneurship 24

catastrophic risk

an unpredictable event that causes severe loss to many people at a time

what items are covered by a basic property insurance policy

building, furnishings, equipment, supplies, cash, inventory

vendors (suppliers)

businesses that sell products to other businesses

purchasing

buying materials, products, or services for business purposes

sourcing

choosing appropriate vendors to supply desired business goods or services

general liability

covers expenses related to injuries sustained on the business premises

professional liability

covers harm done by a business's actions or failure to act

business interruption insurance

covers losses if a business can't operate due to a covered event, such as a storm or fire

worker's compensation insurance

covers losses to employees due to job-related injury or illness

what important questions should be asked when identifying important business partners

do i need to rely on anyone to get supplies for my business? would it be easier to share operations or resources with anyone? what services do I need that will help reduce the risk of running the business? what opportunities are there to help my business scale and grow?

3 common types of liability insurance

general, product, professional

law of large numbers

if you want to predict how likely an event is to occur, you will get the most accurate answer by looking at the largest number of cases where it might occur

risk reduction

limiting the chances that something bad will happen

options for securing physical property

locks, alarms, lighting

2 possible sources of information and advice about choosing an insurance agent

other trade/professional associations and exclusive/independent agents from insurance companies

why do some businesses hire outside specialists instead of a full time hire

outsider specialists are more cost effective, one time payments

purchasing managers

people that perform purchasing jobs ex: paper company needs to make paper, purchasing manager buys trees

factors involved with choosing a source or vendor

price, quality, lead time, location, delivery and shipping options, reliability, customer service during and after order placement and after order delivery

cash value

property insured for its actual worth

product liability

protects a business from losses caused by a product it produced or developed

property insurance

protects a business's possessions in the event of a fire, theft, and damage from wind or rain

liability insurance

provides protection when a business's actions or lack of action injures another party

volume buying (buying in bulk)

purchasing a large quantity from a vendor in order to take advantage of the quantity discount

speculative risk

risk that holds the possibility of gain or loss

ways for a business to try and prevent accidents, injury and crime in the workplace

safety training, first aid supplies, offer/sponsor anger management/wellness programs

risk transfer

shifting risk to another party

speculative vs pure risk

speculative=chance for gain or loss: managed by market research pure=only loss: managed by avoiding and reducing it

options for safeguarding information

tech support, encryption software

procurement

the act of purchasing

insurance premiums

the amount of money an individual or business pays for an insurance policy

premium

the amount of money the policyholder pays for coverage

deductible

the amount the insured must pay before the insurance is required to chip in

pure risk

the chance of loss with no chance of gain

replacement cost

the cost of replacing it at current prices, usually higher

coverage

the protection provided by the policy

ergonomics

the study of designing environments to fit the people who use them

2 types of insurance that are growing in popularity

theft and employment practices liability

why is it difficult for small businesses to take advantage of very large quantity discounts

they do not have enough storage space

policy

a written contract between the insurer and the policyholder

quantity discount

a discount given to buyers for purchasing a large quantity of a product or service from a vendor

trade discount

a discount given to resellers who are in the same trade, industry, or distribution chain as a vendor