Chapter 1 Flashcards
What is “Risk Perception”
An individual’s perception of a particular risk
For Example: a lot of people will be more concerned about the risk of being involved in an
airplane crash than the possibility of a serious road traffic accident, even though the risk of
the latter occurring is significantly higher. This can in part be explained by the element of
control involved in driving, and therefore the perception that the individual has control over
the outcome.
However, someone that has recently been involved in a motor accident may in fact have
an inflated view of the risk of it occurring again, as a result of their own personal
experience.
What are these all describing?
• The possibility of an unfortunate occurrence.
• Doubt concerning the outcome of a situation.
• Unpredictability.
• The possibility of loss.
• The chance of gain (such as hoped-for benefit from a gamble or investment strategy).
Risk
What does insurance do for people?
In terms of “risk”
Risk Transfer
What are the three term’s for “risk” used in the insurance marketplace?
- The peril
- The thing (or liability)
- The underwriter will mean both the thing insured, such as the property itself
What type of person is keen to remove risk where possible?
Risk-adverse
What type of person is happy to carry certain risk themselves?
Risk-seeking
What does AIRMIC stand for?
Association of Insurance and Risk Managers in Industry and Commerce (Airmic)
What are the three main reasons commercial risk management is important?
Reduces the potential for loss by identifying and managing hazards.
Gives shareholders a greater degree of confidence in a company’s ability to manage its risks.
It provides a disciplined approach to quantifying risks.
What are the three key steps in the risk management process?
Risk Identification
Risk Analysis
Risk Control
What does risk identification look at?
Previous threats
Potential threats
What three aspects are there to controlling a risk?
Physical control measures
Financial control measures
Developing a good risk culture
What is a physical control measure?
Putting specific locks on the doors of a factory to reduce the theft risk
What is an example of a financial control risk?
Transferring the risk by either taking out insurance or by contract (e.g.
arranging for a security firm to accept responsibility for cash whilst in its control).
How do you achieve “ developing a good risk culture” ?
This can be achieved by
educating employees or clients on how to avoid or reduce risks.
What are the three main ways internal controls are categorized?
Detective controls
Corrective controls
Preventative controls
What do “detective controls” do?
They detect errors or irregularities that may have occurred.
What does “corrective controls” mean?
Corrective controls correct errors or irregularities that have been detected.
What does “preventative controls” mean?
Preventative controls keep errors or irregularities from occurring in the first place.
What has The National Cyber Security Centre been central to developing?
The development and research that is used to manage cyber risks.
What does FPA stand for and what kind of work do they do?
Fire Protection Association (FPA).
new materials
methods of construction
Set rules for construction
• providing rules for the construction, installation and operation of fire extinguishing
appliances, e.g. sprinkler systems
What does Thatcham Research Centre do?
Test vehicle safety and security systems, and for testing seats for whiplash protection.
What does MIAFTR stand for?
Motor Insurance Anti-Fraud and Theft Register
(MIAFTR)
What does ABI stand for?
Association of British Insurers (ABI)
What did the MIAFTR and ABI aim to combat together? and how?
Fraudulent claims.
Create a register of all vehicle that has become a total loss and makes the information available to all companies. Also making vehicle records such as registered address available .