RMI 2302 Exam 1 Study Guide – Risk Management
Concepts, Tools & Strategies FSU Latest Updated
Questions with A+ Graded Rationales
Risk (1)
uncertainty regarding loss
Risk level (1)
(impact level • likelihood of occurrence)
Frequency (1)
likelihood; how often
Severity (1)
impact; how bad
Expected value (loss) (1)
(frequency • severity)
Degree of Risk (1)
relative variation of actual from expected loss (variation or standard deviation)
Risk Management Process (1)
1. Determination of objectives
2. Identification of risks
3. Evaluation of risks
4. Consideration of alternatives - selection of the tool
5. Implementing the decision
6. Evaluation and review
Post-loss Objectives (1)
Survival
Continuity of Operations
Earnings Stability
Continued Growth
Social Responsibility
Pre-loss Objectives (1)
, Economy
Reduction in Anxiety
Meeting Externally Imposed Obligations
Social Responsibility
Identification of Risk (1)
variety of tools; questionnaires, checklists, and procedure guides.
- preferred approach is a "combination approach," in which all of the tools available are brought
on the problem.
Variance (1)
(n.) - a difference between what is expected and what actually occurs
[loss value - E(loss)]^2 • P(loss)
Standard Deviation (1)
the square root of the variance and provides a measure of the standard, or average, distance
from the mean
Risk (loss) prevention (1)
try to prevent the occurrence of loss (reduce frequency)
Risk (loss) reduction (1)
try to reduce the severity of losses that do occur (reduce severity)
Types of risk (loss) control
• reduced level of risky activity
• increased precautions
Types of risk (loss) financing
• retention and self insurance
• insurance
• hedging
• other contractual risk transfers
Types of Internal Risk Reduction
• diversification
• investments in information
Retention (1)
Concepts, Tools & Strategies FSU Latest Updated
Questions with A+ Graded Rationales
Risk (1)
uncertainty regarding loss
Risk level (1)
(impact level • likelihood of occurrence)
Frequency (1)
likelihood; how often
Severity (1)
impact; how bad
Expected value (loss) (1)
(frequency • severity)
Degree of Risk (1)
relative variation of actual from expected loss (variation or standard deviation)
Risk Management Process (1)
1. Determination of objectives
2. Identification of risks
3. Evaluation of risks
4. Consideration of alternatives - selection of the tool
5. Implementing the decision
6. Evaluation and review
Post-loss Objectives (1)
Survival
Continuity of Operations
Earnings Stability
Continued Growth
Social Responsibility
Pre-loss Objectives (1)
, Economy
Reduction in Anxiety
Meeting Externally Imposed Obligations
Social Responsibility
Identification of Risk (1)
variety of tools; questionnaires, checklists, and procedure guides.
- preferred approach is a "combination approach," in which all of the tools available are brought
on the problem.
Variance (1)
(n.) - a difference between what is expected and what actually occurs
[loss value - E(loss)]^2 • P(loss)
Standard Deviation (1)
the square root of the variance and provides a measure of the standard, or average, distance
from the mean
Risk (loss) prevention (1)
try to prevent the occurrence of loss (reduce frequency)
Risk (loss) reduction (1)
try to reduce the severity of losses that do occur (reduce severity)
Types of risk (loss) control
• reduced level of risky activity
• increased precautions
Types of risk (loss) financing
• retention and self insurance
• insurance
• hedging
• other contractual risk transfers
Types of Internal Risk Reduction
• diversification
• investments in information
Retention (1)
