RMIN 4000 Brown UGA Test 1 Exam
Questions and Answers 100% Solved
Frequency - ✔✔How often does a loss occur?
The number of losses (such as fire, theft, collision) that occur within a
specified time period
probability of a loss
severity - ✔✔How much does it cost when a loss does occur?
The dollar amount of loss for a specific peril (fire, theft, collision)
Peril - ✔✔cause of a loss
Ex. fire, tornado, collision, burglary
hazard - ✔✔condition that creates or increases the frequency and/or
severity of a loss
physical hazard - ✔✔a physical condition that increases the frequency
and/or severity of a loss
moral hazard - ✔✔dishonesty or character defects in an individual that
increase the frequency and/or severity of a loss
,presence of insurance changes the behavior of the insured
Ex. using a hammer to create "hail" damage to a roof
morale hazard - ✔✔carelessness or indifference to a loss, which increases
the frequency and/or severity of a loss
ex. leaving keys in an unlocked car
personal risk - ✔✔directly affects an individual or family; involve the
possibility of loss of income, extra expenses, depletion of financial assets
ex. death, unemployment, disability/injury/ poor health, inadequate
retirement income
direct loss - ✔✔cost to repair or replace property damaged by a peril
indirect loss - ✔✔financial loss resulting as a consequence of a direct loss
ex. fire damages your home, you have to live somewhere else while its
repaired
, risk management - ✔✔process that identifies loss exposures faced by an
organization and selects the most appropriate techniques for treating such
exposures
loss exposure - ✔✔any situation or circumstance in which a loss is
possible, regardless of whether a loss actually occurs
maximum possible loss - ✔✔worst loss that could happen to a firm during
its lifetime
probable maximum loss - ✔✔the worst loss that is likely to happen
risk control - ✔✔techniques that reduce the frequency or severity of losses
avoidance - ✔✔a certain loss exposure is never acquired or an existing
loss exposure is abandoned
frequency reduced to zero
disadvantages:
may not be possible
usually has an opportunity cost
avoiding one loss exposure may create another
loss prevention - ✔✔measures that reduce the frequency of a particular
loss
does not completely eliminate risk
Questions and Answers 100% Solved
Frequency - ✔✔How often does a loss occur?
The number of losses (such as fire, theft, collision) that occur within a
specified time period
probability of a loss
severity - ✔✔How much does it cost when a loss does occur?
The dollar amount of loss for a specific peril (fire, theft, collision)
Peril - ✔✔cause of a loss
Ex. fire, tornado, collision, burglary
hazard - ✔✔condition that creates or increases the frequency and/or
severity of a loss
physical hazard - ✔✔a physical condition that increases the frequency
and/or severity of a loss
moral hazard - ✔✔dishonesty or character defects in an individual that
increase the frequency and/or severity of a loss
,presence of insurance changes the behavior of the insured
Ex. using a hammer to create "hail" damage to a roof
morale hazard - ✔✔carelessness or indifference to a loss, which increases
the frequency and/or severity of a loss
ex. leaving keys in an unlocked car
personal risk - ✔✔directly affects an individual or family; involve the
possibility of loss of income, extra expenses, depletion of financial assets
ex. death, unemployment, disability/injury/ poor health, inadequate
retirement income
direct loss - ✔✔cost to repair or replace property damaged by a peril
indirect loss - ✔✔financial loss resulting as a consequence of a direct loss
ex. fire damages your home, you have to live somewhere else while its
repaired
, risk management - ✔✔process that identifies loss exposures faced by an
organization and selects the most appropriate techniques for treating such
exposures
loss exposure - ✔✔any situation or circumstance in which a loss is
possible, regardless of whether a loss actually occurs
maximum possible loss - ✔✔worst loss that could happen to a firm during
its lifetime
probable maximum loss - ✔✔the worst loss that is likely to happen
risk control - ✔✔techniques that reduce the frequency or severity of losses
avoidance - ✔✔a certain loss exposure is never acquired or an existing
loss exposure is abandoned
frequency reduced to zero
disadvantages:
may not be possible
usually has an opportunity cost
avoiding one loss exposure may create another
loss prevention - ✔✔measures that reduce the frequency of a particular
loss
does not completely eliminate risk
