RMI 2302 FINAL EXAM DR. NYCE
Name the risks at the organization level - Answers :Business, Operational, Hazard,
Financial, and Strategic
Why Categorize Risk? - Answers :Expertise, Risk management techniques, categories
may not be mutually exclusive.
Define and give an example of Business Risk - Answers :Possibility that a company will
have lower than anticipated profits, or that it will experience a loss rather than a profit.
Prices, regulation, and competition are all examples
Risks at the individual level - Answers :Property, Liability, Life, Health, Financial
These may not be mutually exclusive but need to be categorized for risk management
techniques
What is Loss Exposures? - Answers :Any situation that presents a possibility of loss,
regardless of whether that loss actually occurs.
3 elements to loss exposure: Asset exposed to loss, Cause of loss, Financial
consequences of the loss
Property - Answers :Asset Exposed to loss: Real property: buildings Land, Personal
Property: Your stuff
Cause of Loss: Fire, Theft, accidents, lost
Financial Consequences: Reduction in property value, Increased exp., Lost income
Liability - Answers :Asset Exposed to loss: Money, Stocks, etc
Cause of Loss: Claim / Lawsuit, civil law vs. criminal, tort, contract, statutory, neg.
Financial Consequences: Defense costs, Monetary damages
Name the specific types of Liability - Answers :Property owners
Automobiles
Employer-employee
Parents & children
Animals
Life - Premature Death - Answers :Asset exposed to loss: You
Cause of Loss: Premature death (Ilness, accident, stupidity(marcus...))
Financial Consequences: Think about who is getting hurt here. If it's a single parent with
or without kids. If it's a married couple with or without kids or simply a college kid. This is
subjective.
Life - Long life - Answers :Asset exposed to loss: Retirement, savings, wealth
Cause of loss: Outliving assets, exp > income
Financial consequences: What happens when we retire income drops expenses
(usually) go up
, Health - Answers :Asset exposed to loss: Your health, livelihood
Cause of loss: Poor care, poor genes, bad luck, injury
Financial Consequences: Ability to earn income may decrease, or stop completely,
living expenses may go up, this can overlap with premature death
Financial - Answers :Asset exposed to loss: your wealth
Cause of loss: Health, disability, unemployment, poor planning
Financial Consequences: Inadequate savings, back to work, can't retire
Risk management process 6 steps - Answers :Determine Objectives
Identify Risks
Evaluate Risks
Choose your alternatives
Implement
Review & Evaluate
Difference between a natural disaster and a great natural disaster? - Answers :Death
toll, damage, effect on economy
Not a clear definition, hard to bring precision to natural events (Why am i writing this if
there's no clear definition...)
Human Response to Disasters - Answers :People tend to be altruistic in times of
emergency
Creates incentives in non-emergency times
(People think they will always be saved and don't need to prepare for hurricanes,
tornadoes, etc..
Define and give an example of Operational Risk - Answers :A risk incurred by an
organisation's internal activities.
Ex: Manufacturing processes, Fraud, Mismanagement
Define and give an example of Hazard Risk - Answers :Potential losses that only have a
down side
Fire, Auto accident, tornado, earthquake
Define and give an example of Financial Risk - Answers :Potential variation due to
financial causes
Ex: Investment losses, credit risks, liquidity risks
Define and give an example of Strategic Risk - Answers :Potential variation from poor
business decisions
Ex: Product mix, supplier choice, financing options
What can organizations use Big Data for? - Answers :Mitigate risky business practices,
employee fraud, & black swans
Name the risks at the organization level - Answers :Business, Operational, Hazard,
Financial, and Strategic
Why Categorize Risk? - Answers :Expertise, Risk management techniques, categories
may not be mutually exclusive.
Define and give an example of Business Risk - Answers :Possibility that a company will
have lower than anticipated profits, or that it will experience a loss rather than a profit.
Prices, regulation, and competition are all examples
Risks at the individual level - Answers :Property, Liability, Life, Health, Financial
These may not be mutually exclusive but need to be categorized for risk management
techniques
What is Loss Exposures? - Answers :Any situation that presents a possibility of loss,
regardless of whether that loss actually occurs.
3 elements to loss exposure: Asset exposed to loss, Cause of loss, Financial
consequences of the loss
Property - Answers :Asset Exposed to loss: Real property: buildings Land, Personal
Property: Your stuff
Cause of Loss: Fire, Theft, accidents, lost
Financial Consequences: Reduction in property value, Increased exp., Lost income
Liability - Answers :Asset Exposed to loss: Money, Stocks, etc
Cause of Loss: Claim / Lawsuit, civil law vs. criminal, tort, contract, statutory, neg.
Financial Consequences: Defense costs, Monetary damages
Name the specific types of Liability - Answers :Property owners
Automobiles
Employer-employee
Parents & children
Animals
Life - Premature Death - Answers :Asset exposed to loss: You
Cause of Loss: Premature death (Ilness, accident, stupidity(marcus...))
Financial Consequences: Think about who is getting hurt here. If it's a single parent with
or without kids. If it's a married couple with or without kids or simply a college kid. This is
subjective.
Life - Long life - Answers :Asset exposed to loss: Retirement, savings, wealth
Cause of loss: Outliving assets, exp > income
Financial consequences: What happens when we retire income drops expenses
(usually) go up
, Health - Answers :Asset exposed to loss: Your health, livelihood
Cause of loss: Poor care, poor genes, bad luck, injury
Financial Consequences: Ability to earn income may decrease, or stop completely,
living expenses may go up, this can overlap with premature death
Financial - Answers :Asset exposed to loss: your wealth
Cause of loss: Health, disability, unemployment, poor planning
Financial Consequences: Inadequate savings, back to work, can't retire
Risk management process 6 steps - Answers :Determine Objectives
Identify Risks
Evaluate Risks
Choose your alternatives
Implement
Review & Evaluate
Difference between a natural disaster and a great natural disaster? - Answers :Death
toll, damage, effect on economy
Not a clear definition, hard to bring precision to natural events (Why am i writing this if
there's no clear definition...)
Human Response to Disasters - Answers :People tend to be altruistic in times of
emergency
Creates incentives in non-emergency times
(People think they will always be saved and don't need to prepare for hurricanes,
tornadoes, etc..
Define and give an example of Operational Risk - Answers :A risk incurred by an
organisation's internal activities.
Ex: Manufacturing processes, Fraud, Mismanagement
Define and give an example of Hazard Risk - Answers :Potential losses that only have a
down side
Fire, Auto accident, tornado, earthquake
Define and give an example of Financial Risk - Answers :Potential variation due to
financial causes
Ex: Investment losses, credit risks, liquidity risks
Define and give an example of Strategic Risk - Answers :Potential variation from poor
business decisions
Ex: Product mix, supplier choice, financing options
What can organizations use Big Data for? - Answers :Mitigate risky business practices,
employee fraud, & black swans
