RMIN 4000 Test 1 Questions and Answers (GRADED A+)

Risk - ANSWER-a calculated possibility of a negative outcome Exposures - ANSWER-things of value (assets) that could be lost Perils - ANSWER-Things that can happen to assets Risk Management - ANSWER-Process that identifies loss exposures faced by an organization and selects the most appropriate techniques for treating such exposures. Calculated Possibility - ANSWER-a probabilistic outcome (chance of loss; likelihood of loss) that is known or estimated ranges from 0% - 100% Negative outcome - ANSWER-loss; must be quantifiable ($) Frequency - ANSWER-how often does a loss occur the number of losses that occur within a specific time period probability of a loss Severity - ANSWER-how much it costs when a lost does occur The dollar amount of loss for a specific peril frequency equation - ANSWER-F = number of losses/number of exposures Severity equation - ANSWER-total losses (in dollars) / number of losses Four types of hazard - ANSWER-Moral, Morale, Physical, Legal Physical Hazard - ANSWER-A physical condition that increases the frequency and/or severity of a loss. Moral Hazard - ANSWER-Dishonesty or character defects in an individual that increase the frequency and/or severity of a loss. Morale Hazard - ANSWER-Carelessness or indifference to a loss, which increases the