Chapter 1 Flashcards

1
Q

Non diversifiable Risk

A

Risks are correlated and affect a large segment of society. Think about risk can cause large negative effects on large group

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2
Q

Diversifiable Risk

A

Not correlated and can be managed through diversification, spread out. Will only affect small groups. Think capacity in an area for insurance

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3
Q

Subjective risk

A

May be different from the actual underlying risk. Perceived risk based on opinion

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4
Q

Objective risk

A

Measurable variation of outcomes based on facts and data

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5
Q

Financial risks

A

Come from the affect of market forces and can include market risk, think future price of a stock, liquidity risk - how quickly can it be sold without a loss

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6
Q

Risk management standard

A

A Document best practices and criteria to meet

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7
Q

Risk criteria

A

Information used to measure

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8
Q

Frequency

A

Number of losses

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9
Q

Severity

A

How bad was the loss size of the payment

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