Apendix I Flashcards
risk
uncertainty about future events
speculative risk
risk involving the possibility of gain or loss
pure risk
risk involving only the possibility of loss or no loss
risk management
process of conserving the firm’s earning power and assets by reducing the threat of losses due to uncontrollable events
risk avoidance
practice of avoiding risk by declining or ceasing to participate in an activity
risk control
practice of minimizing the frequency or severity of losses from risky activities
risk retention
practice of covering a firm’s losses with its own funds
risk transfer
practice of transferring a firm’s risk to another firm
insurance premium
fee paid to an insurance company by a policyholder for insurance coverage
insurance policy
formal agreement to pay the policyholder a specified amount in the event of certain losses
deductible
amount of the loss that the insured must absorb prior to reimbursement
liability insurance
insurance covering losses resulting from damage to people or property when the insured party is judged liable
workers’ compensation coverage
coverage provided by a firm to employees for medical expenses, loss of wages, and rehabilitation costs resulting from job-related injuries or disease
property insurance
insurance covering losses resulting from physical damage to or loss of the insured’s real estate or personal property
business interruption insurance
insurance covering income lost during times when a company is unable to conduct business
