1. What is risk?

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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


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