Risk Management Quiz 2 Mccloskey 100% Correct Answers

Risk Management - ANS specialized branch of financial management Steps in a Risk Management Process - ANS 1. identify exposures to loss 2. evaluate exposures to loss 3. identify possible alternatives 4. select among the alternatives 5. implement the selection 6. re-evaluate periodically the chose strategies Loss exposure - ANS possibility of a financial loss that a particular entity faces as the result of peril striking a thing of value -anything that could go wrong that'll cost money -failure to identify this can lead to bankruptcy How to identify exposures - ANS 1. inspections of plant and facility (walk arounds) 2. contract analysis 3. look at past information 4. share loss information with other similar firms through trade associations 5. checklists/standardized surveys from insurance companies 6. flow chart approach 7. ask employees/managers in the firm 8. financial statement approach Property Loss Exposure - ANS -Real property (land and building) -Personal property (tangible: equipment furniture, what's inside the building) (intangible: goodwill, patent, trademark, copyright) Net Income Loss Exposure - ANS -Business Interruption -a firm suffers a primary loss as the result suffers a secondary loss that results indirect expenses -decrease in revenue and increase in expenses Personnel Loss Exposure - ANS A firm has a key employee who suffers personal loss ex. death, disability, illness firm suffers: -revenue decrease -sales are down -decisions are not made Intentional behavior - ANS assault, libel, slander Unintentional behavior - ANS negligence or carelessness (lyft or pub webb) Negligence - ANS failure of a person to exercise the proper degree of care Property Losses (PD) - ANS -relatively simple to calculate -tangible Bodily Injury (BI) - ANS -special damages -medical expenses -loss of income -easy to calculate but not simple Measure bodily injury damages - ANS -compensate for intangible losses -paid for an inconvenience of pain and suffering -mental anguish (ptsd, depression, woman in elevator) -depends on who you are (janitor and surgeon) Defenses to liability - ANS -assuming the risk by the injured party ex. skydiving or attending a hockey game RES IPSA LOQUITOR - ANS -"the thing speaks for itself" -presumption of negligence on part of defendant -defendant has to prove they aren't guilty requirements: -defendant exclusively controls tool/equipment -wouldn't occur unless negligence usually -injured party doesn't contribute to loss (dentist removes wrong tooth) Vicarious liability - ANS -one person becomes legally liable for the negligent behavior of another -employers are held responsible for actions of their employees while they are employees -ex. TA punches you in office hours (can sue temple) vs. at a bar (can't sue temple) Joint and Several liability - ANS -negligence of two or more parties contributes to the injury or damage -injured party may recover entire amount of compensation from any negligent party who can pay -"search for deep pockets" -ex. nightclub sued budweiser, home depot, speaker company because they had money Product Liability - ANS -product is negligently made or improperly designed -proper warning is not give to consumer -manufacturers of faulty product that injures someone or damages property may be legally liable -seinfeld example -coffee cup lid (mcdonalds) Product Liability Losses - ANS -cost of defending and paying claims for injury -cost of recalling any batches of products suspected of being defective -damage to your name Premises Liability - ANS -owner or tenant may be held liable for damages if someone is injured -if the property of others is damaged in or because of premises trespasser - ANS -someone who comes without right or consent -only obligated to abstain from doing intentional harm lincensee - ANS -comes to property with the knowledge of owner (jehovah's witness, mailman) -no purpose or benefit to owner -must warn of any hidden dangers Social guest/invitee - ANS -been invited for some purpose -customer in store -nothing can happen to them!!! -must keep premises safe so no harm comes -everyone on lease is responsible animal liability - ANS -exotic animals (nondomesticated pets) -strict liability -ex. even if a trespasser gets attacked you're still liable Traditional Risk Management (TRM) - ANS -4 loss exposure (property, net income, personnel, liability) -Silo approach -Pure Insurable Risks