RMI 2302 EXAM 1 COLE STUDY GUIDE
Risk - Answers - Uncertainty regarding loss.
Individual Risk - Answers - Associated with playing sports, driving, investing, and daily
living.
Organization Risk - Answers - Uncertain future event affecting an organization's
objectives.
Societal Risk - Answers - Uncertain future event affecting a large portion of the
population.
Frequency - Answers - How often an event occurs, compared to the total possible
occurrences.
Severity - Answers - The potential impact or magnitude of a loss when it occurs.
Expected Loss - Answers - Outcome measured by the expected frequency multiplied by
the expected severity.
Pure Risk - Answers - Involves only potential loss or no loss, with no possibility of gain.
Speculative Risk - Answers - Involves potential loss, no loss, or a gain.
Static Risk - Answers - Risks that remain unchanging over time.
Dynamic Risk - Answers - Risks that change over time.
Fundamental Risk - Answers - Affects a large portion of the population at a given time.
Particular Risk - Answers - Affects a single person or a small group of people at a given
time.
Core Risk - Answers - Inherent to the fundamental activities of an organization.
Secondary Risk - Answers - Not part of the core operations of an organization.
Exposure - Answers - Person, organization, or property facing the risk of loss.
Peril - Answers - The immediate cause of a loss.
Hazard - Answers - Condition affecting the frequency or severity of a loss.
, Risk Neutral - Answers - Indifferent toward risk, valuing any risky situation based on the
expected outcome.
Risk Averse - Answers - Prefer to avoid risk, willing to pay to remove risk.
Risk Seeker - Answers - Prefer risk to no risk, willing to take on risk at values below
expected value.
Risk Management - Answers - Scientific approach to dealing with risk, aiming to identify,
assess, and prepare for potential losses.
Risk Retention - Answers - Paying for the risk that remains following risk control
techniques.
Risk Transfer - Answers - Transferring the risk of adverse outcomes to another entity,
often through insurance or contracts.
Internal Risk Reduction - Answers - Techniques or measures that do not neatly fit into
risk control or risk financing, such as investments in information or diversification.
Risk Management - Answers - The process of identifying, assessing, and prioritizing
risks followed by the coordinated application of resources to minimize, monitor, and
control the probability or impact of unfortunate events.
Probability Theory - Answers - A branch of mathematics dealing with the analysis of
random phenomena, where the likelihood of various outcomes can be quantified.
Divine Providence - Answers - The belief that a higher power or deity determines the
outcome of events, prevalent before the scientific approach to risk management.
Pierre de Fermat - Answers - French mathematician who, through correspondence with
Blaise Pascal, contributed to the establishment of probability theory.
Insurance Valuation - Answers - The application of probability theory by insurers to
assess the value of speculative policies, distinguishing insurance from gambling.
Public Policy - Answers - Government policies and regulations that impact the entire
population, established to address societal needs and concerns.
Mortality Risk - Answers - The probability of an individual suffering an adverse effect
from an activity or exposure over a given period, used to inform public policy.
Lifetime Risk - Answers - The probability of an individual dying from a specific cause
over their lifetime, used to assess the impact of various activities on society.
Risk - Answers - Uncertainty regarding loss.
Individual Risk - Answers - Associated with playing sports, driving, investing, and daily
living.
Organization Risk - Answers - Uncertain future event affecting an organization's
objectives.
Societal Risk - Answers - Uncertain future event affecting a large portion of the
population.
Frequency - Answers - How often an event occurs, compared to the total possible
occurrences.
Severity - Answers - The potential impact or magnitude of a loss when it occurs.
Expected Loss - Answers - Outcome measured by the expected frequency multiplied by
the expected severity.
Pure Risk - Answers - Involves only potential loss or no loss, with no possibility of gain.
Speculative Risk - Answers - Involves potential loss, no loss, or a gain.
Static Risk - Answers - Risks that remain unchanging over time.
Dynamic Risk - Answers - Risks that change over time.
Fundamental Risk - Answers - Affects a large portion of the population at a given time.
Particular Risk - Answers - Affects a single person or a small group of people at a given
time.
Core Risk - Answers - Inherent to the fundamental activities of an organization.
Secondary Risk - Answers - Not part of the core operations of an organization.
Exposure - Answers - Person, organization, or property facing the risk of loss.
Peril - Answers - The immediate cause of a loss.
Hazard - Answers - Condition affecting the frequency or severity of a loss.
, Risk Neutral - Answers - Indifferent toward risk, valuing any risky situation based on the
expected outcome.
Risk Averse - Answers - Prefer to avoid risk, willing to pay to remove risk.
Risk Seeker - Answers - Prefer risk to no risk, willing to take on risk at values below
expected value.
Risk Management - Answers - Scientific approach to dealing with risk, aiming to identify,
assess, and prepare for potential losses.
Risk Retention - Answers - Paying for the risk that remains following risk control
techniques.
Risk Transfer - Answers - Transferring the risk of adverse outcomes to another entity,
often through insurance or contracts.
Internal Risk Reduction - Answers - Techniques or measures that do not neatly fit into
risk control or risk financing, such as investments in information or diversification.
Risk Management - Answers - The process of identifying, assessing, and prioritizing
risks followed by the coordinated application of resources to minimize, monitor, and
control the probability or impact of unfortunate events.
Probability Theory - Answers - A branch of mathematics dealing with the analysis of
random phenomena, where the likelihood of various outcomes can be quantified.
Divine Providence - Answers - The belief that a higher power or deity determines the
outcome of events, prevalent before the scientific approach to risk management.
Pierre de Fermat - Answers - French mathematician who, through correspondence with
Blaise Pascal, contributed to the establishment of probability theory.
Insurance Valuation - Answers - The application of probability theory by insurers to
assess the value of speculative policies, distinguishing insurance from gambling.
Public Policy - Answers - Government policies and regulations that impact the entire
population, established to address societal needs and concerns.
Mortality Risk - Answers - The probability of an individual suffering an adverse effect
from an activity or exposure over a given period, used to inform public policy.
Lifetime Risk - Answers - The probability of an individual dying from a specific cause
over their lifetime, used to assess the impact of various activities on society.
