RMI 2302 Chapter 1- Basic Of Risk Questions and Answers 100% Pass

RMI 2302 Chapter 1- Basic Of Risk Questions and Answers 100% Pass What is Risk? Uncertainty Regarding Loss How to measure risk? In Standard Deviation or Variation Can information alter risk? No, but it can alter uncertainty Pure Risk A category of risk in which loss is the only possible outcome; there is no beneficial result Speculative Risk A category of risk that, when undertaken, results in an uncertain degree of gain or loss. Static Risk Are the losses that are caused by factors other than a change in the economy Example of Static Risk hurricanes, earthquakes, other natural disasters Dynamic Risk Are the result of the economy changing Example of Dynamic Risk Inflation, recession, and other business cycle changes Fundamental Risk Exposure to loss from a situation affecting a large group of people or firms, and caused by (a) natural phenomenon or (b) social phenomenon Particular Risk Exposure to loss from a situation associated with specific individual events, such as a break-in, fire, or robbery. Personal Risk Is the exposure to financial loss and/or additional expenses resulting from premature death or disability Property Risk The possibility of financial loss occurring as the result of owing a real estate investment Liability Risk Risk to a company arising from the possibility of liability for damages resulting from the purchase, ownership, or use of a good or service offered by that company. Financial Risk The possibility that shareholders will lose money when they invest in a company that has debt, if the company's cash flow proves inadequate to meet its financial obligations. Exposure Person or property facing risk of loss Peril Immediate cause of loss Hazard Condition affecting the frequency or severity of loss Physical Hazards Property Conditions Moral Hazard Behavioral Changes because for example I have insurance now I am going to start driving recklessly Societal Hazards Legal or Cultural Risk Neutral Indifferent Towards