RMI 2101 - Quiz 2 Latest Update Graded A+

RMI 2101 - Quiz 2 Latest Update Graded A+ Handlers of RM before RM Dept. Finance dept - small org risk manager - med org cro - large org who coined the term Risk Management? Prof. Wayne Snider of Temple University STEPS IN THE RM PROCESS 1. Identify the Exposure to Loss*** 2. Evaluate the Exposure to Loss 3. Identify Possible Alternatives 4. Select from Among the Alternatives 5. Implementation of the Chosen Option 6. Periodically Re-Evaluate the Chosen Strategies what is a loss exposure? possibility of a financial loss that a particular entity faces as the result of a peril striking a thing of value (when shit happens) How to identify loss exposures? 1. inspections of facilities (walk-arounds) 2. Contract analysis 3. analyze past information (ineffective in regards to dynamic risk) 4. share loss information with other similar firms (benchmark) 5. checklists/standardized surveys from insurance companies 6. the flow chart approach 7. communicate with employees/managers 8. the financial statement approach 4 types/categories of loss exposure 1. property 2. net income 3. personnel 4. liability Property real property - land, building personal property - tangible or intangible (IP) Property Loss Exposure when loss to a property is a loss to the owner (firm or individual) When is Interest in Property Supportable? 1. Ownership Interest (present or future) 2. Buyers and Sellers (FOB shipping) 3. Bailee Interest 4. Tenant Interest (continued use interest) bailee An entity who receives property from another under contract of a bailment bailment interest for the bailee is legal liability to return the property or pay to replace it tenancy duty to return property in reasonable condition Business Interruption when the normal productive process of a firm is interrupted Net income loss exposure possibility of a secondary loss (the business interruption) that occurs as a result of a primary loss, through increasing expense or/and decreasing revenue