BU - Risk Management Flashcards
4 ways risk can be addressed
Risk Avoidance
Risk Reduction
Risk Transfer
Risk Retention
Risk Avoidance, what is it, when do you use it and what are examples
Risk that cannot be reduced or transferred - catastrophic
High frequency and high severity
Examples: avoid bungee jumping, or driving due to fear of an accident
Risk Reduction, what is it, when do you use it and what are examples?
techniques that are designed to reduce the likelihood of loss
High frequency and high and low severity
security systems, fire detectors, seatbelts
Risk transfer, what is it, when do you use and examples
shifting the financial consequences to a 3rd party
low frequency and high severity
example is insurance
Risk retention, what is it, when do you use it and examples
intentionally and unintentionally retaining the risk
low severity and low frequency
examples are insurance deductibles, elimination periods or self insuring
