Chapter 1 - Glossary Flashcards
Define cloud computing.
Info, tech, & storage services contractually provided from remote locations, through the Internet or another network, w/out a direct server connection.
Define correlation.
A relationship btwn variables.
Define cost of risk.
Total cost incurred by an organisation because of possibility of accidental loss.
Define credit risk.
The risk that customers/creditors will fail to make promised payments as they come due.
Define diversifiable risk.
A risk that affects only some individuals, businesses, or small groups.
Define enterprise risk management.
An approach to managing all of an organisation’s key business risks & opportunities w/the intent of maximizing shareholder value.
Define exposure.
Any condition that presents a possibility of gain or loss, whether or not an actual loss occurs.
Define Internet of Things (IoT).
A network that objects that transmit data to computers.
Define Law of Large Numbers.
A mathematical principle stating that as the number of similar but independent exposure units increases, the relative accuracy of predictions about future outcomes (losses) also increases.
Define liquidity risk.
The risk that an asset cannot be sold on short notice w/out incurring a loss.
Define market risk.
Uncertainty about an investment’s future value because of potential changes in the market for that type of investment.
Define nondiversifiable risk.
A risk that affects a large segment of society at the same time.
Define objective risk.
The measurable variation in uncertain outcomes based on facts and data.
Define pure risk.
A change of loss or no loss, but no change of gain.
Define risk profile.
A set of characteristics common to all risks in a portfolio.
Define smart product.
An innovative item that uses sensors; wireless sensor networks; and data collection, transmission, and analysis to further enable the item to be faster, more useful, or otherwise improved.
Define speculative risk.
A change of loss, no loss, or gain.
Define subjective risk.
The perceived amount of risk based on an individual’s or organisation’s opinion.
Define systemic risk.
The potential for a major disruption in the function of an entire market or financial system.
Define telematics.
The use of technological devices in vehicles w/wireless communication & GPS tracking that transmit data to businesses or gov’t agencies; some return info for the driver.
Define time horizon.
Estimate duration.
Define value at risk.
A threshold value such that the probability of loss on the portfolio over the given time horizon exceeds this value, assuming normal markets and no trading in the portfolio.
Define volatility.
Frequent fluctuations, such as in the price of an asset.
