RIBO: ENTRY LEVEL 1 91 QUESTIONS AND ANSWERS

Risk - ️️Chance of a loss Which type of risk is insured and why? - ️️Pure risk, because speculative risk is comparable to gambling. 3 Ways risk (management) is dealt with? - ️️REDUCE: preventative measures ASSUME/RETAIN: Self-insure TRANSFER: purchase insurance Which of the following is not a risk? A) Assume or retain risk B) Reduce the risk C) Doing nothing / avoiding the risk D) Transfer the risk - ️️C) Doing nothing / avoiding the risk Insurer - ️️Insurance company Stock Insurance company - ️️Owned by shareholders Mutual insurance company - ️️Owned by policyholders - Usually smaller, for Ex., One big claim can flux the premium. Once these companies become big they are titled stockholders. Co-operative associations - ️️Not looking to consume profits, these policies are expected to be cheaper.