RMIN 4000 UGA Test 1 Questions and Answers 100% Correct!

What is risk? - ANSWER-a calculated possibility of a negative outcome What is calculated possibility? - ANSWER-a probabilistic outcome that is known or estimated (ranges from 0% to 100%) What is a negative outcome? - ANSWER-a loss that must be quantifiable What is frequency? - ANSWER-how often a loss occurs (frequency= number of losses / number of exposures) What is severity? - ANSWER-How much a loss costs when it occurs (severity = total losses ($) / number of losses) What is a peril? - ANSWER-a cause of a loss (fire, tornado, collision) What is a hazard? - ANSWER-a condition that creates to increases the frequency and/or severity of a loss but does not cause the loss What are the four types of hazards? - ANSWER-- physical - moral - morale - legal What is a physical hazard? - ANSWER-a physical condition that increases the frequency and/or severity of a loss (corrosion on pipes, too many wires plugged in to an outlet) what is a moral hazard? - ANSWER-dishonesty in an individual that increases the frequency or severity of a loss. the presence of insurance changes the behavior of the insured (causing "hail" damage with a hammer) What is a morale hazard? - ANSWER-carelessness or indifference to a loss, which increases the frequency and/or severity of a loss (leaving the car keys in your unlocked car) What is