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Related Flashcards
Related Topics
Cards In This Set
| Front | Back |
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Define risk
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Uncertainty and loss
L2 - 3 |
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Sources of risk
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Property
liability life and health and loss of income financial L2 - 4, 6 |
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Property risk
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Risk that property may be damaged, destroyed, or stolen
ie hurricanes, explosions, riots, collisions, falling objects, business interruption L2 - 4 |
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Liability risk
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Held leagally liable, accidental or not, that results in harm or damage to third party
L2 - 4 |
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3 reasons why liability risk is important
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No max limit in amount of loss (punitive damage, pain and suffering)
lien can be placed on your income and assets legal defense is costly L2 - 5 |
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3 examples of life and health and loss of income risk
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Potential death of parent w/ young children
employees who become ill or injured in accident possibility of the death of a star salesperson L2 - 6 |
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Examples of financial risk
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Credit risk, price risk, foreign exchange risk, commodity risk, and interest rate risk
L2 - 6 |
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Burden of risk
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Economic burden for business, gov't, and individuals
deprive society of certain goods/services worry and fear L2 - 7 |
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Define pure risk
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No possibility of gain; only potential for loss
loss v. no loss ie. fire, theft, car accident L2 - 10 |
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Define speculative risk
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Can produce either a profit or loss
loss, no loss, gain ie. oil prices, exchange rates, interest rates L2 - 10 |
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Define subjective risk
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Uncertainty based on a person's mental condition or state of mind
based on opinion high subjective risk --> prudent behavior ie. drunk driver L2 - 12 |
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Define objective risk
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Observable and measurable
based on fact probable variation of actual from expected losses L2 -12 |
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Static risk
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Unchanging society that is in stable equilibrium
p. 5 |
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Dynamic risk
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Produced because of changes in society
p. 5 |
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A measurement of risk is...
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Degree of risk
L2 - 13 |
