FIN 341 FINAL UPDATED ACTUAL
COMPREHENSIVE STUDY GUIDE 2026
◉ insurance definition of risk.
Answer: used to identify the property or life that is being
considered for insurance
◉ loss exposure.
Answer: any situation or circumstance in which a loss is possible,
regardless of whether a loss occurs
◉ objective risk.
Answer: the relative variation of actual loss from expected loss
◉ Subjective (perceived) risk.
Answer: uncertainty based on a person's mental condition or state
of mind
◉ Chance of Loss vs. Objective Risk.
Answer: The chance of loss may be identical for two different
groups, but objective risk may be quite different
,◉ peril.
Answer: cause of loss
◉ hazard.
Answer: a condition that increases the chance of loss
◉ Physical Hazard.
Answer: a physical condition that increases the frequency or
severity of loss
◉ Moral Hazard.
Answer: dishonesty or character defects in an individual that
increase the frequency or severity of loss
◉ Attitudinal Hazard.
Answer: carelessness or indifference to a loss, which increases the
frequency or severity of a loss
◉ Legal Hazard.
Answer: refers to characteristics of the legal system or regulatory
environment that increase the frequency or severity of losses
◉ Pure Risk.
, Answer: A situation in which there are only the possibilities of loss
or no loss ex. earthquake
◉ Speculative Risk.
Answer: is a situation in which either profit or loss is possible
(gambling)
◉ diversifiable risk.
Answer: affects only individuals or small groups (car theft). It is also
called nonsystematic or particular risk.
◉ nondiversifiable risk.
Answer: affects the entire economy or large numbers of persons or
groups within the economy (hurricane). It is also called systematic
risk or fundamental risk.
◉ Enterprise Risk.
Answer: encompasses all major risks faced by a business firm,
which include: pure risk, speculative risk, strategic risk, operational
risk, and financial risk
◉ Strategic Risk.
Answer: refers to uncertainty regarding the firm's financial goals
and objectives
COMPREHENSIVE STUDY GUIDE 2026
◉ insurance definition of risk.
Answer: used to identify the property or life that is being
considered for insurance
◉ loss exposure.
Answer: any situation or circumstance in which a loss is possible,
regardless of whether a loss occurs
◉ objective risk.
Answer: the relative variation of actual loss from expected loss
◉ Subjective (perceived) risk.
Answer: uncertainty based on a person's mental condition or state
of mind
◉ Chance of Loss vs. Objective Risk.
Answer: The chance of loss may be identical for two different
groups, but objective risk may be quite different
,◉ peril.
Answer: cause of loss
◉ hazard.
Answer: a condition that increases the chance of loss
◉ Physical Hazard.
Answer: a physical condition that increases the frequency or
severity of loss
◉ Moral Hazard.
Answer: dishonesty or character defects in an individual that
increase the frequency or severity of loss
◉ Attitudinal Hazard.
Answer: carelessness or indifference to a loss, which increases the
frequency or severity of a loss
◉ Legal Hazard.
Answer: refers to characteristics of the legal system or regulatory
environment that increase the frequency or severity of losses
◉ Pure Risk.
, Answer: A situation in which there are only the possibilities of loss
or no loss ex. earthquake
◉ Speculative Risk.
Answer: is a situation in which either profit or loss is possible
(gambling)
◉ diversifiable risk.
Answer: affects only individuals or small groups (car theft). It is also
called nonsystematic or particular risk.
◉ nondiversifiable risk.
Answer: affects the entire economy or large numbers of persons or
groups within the economy (hurricane). It is also called systematic
risk or fundamental risk.
◉ Enterprise Risk.
Answer: encompasses all major risks faced by a business firm,
which include: pure risk, speculative risk, strategic risk, operational
risk, and financial risk
◉ Strategic Risk.
Answer: refers to uncertainty regarding the firm's financial goals
and objectives
