Chapter 3 Flashcards
Define frequency.
Number of losses
Define severity.
The size of a loss.
Define avoidance.
A technique that involves ceasing or never undertaking an activity so that the possibility of future gains or losses occurring from that activity is eliminated.
Define separation.
A risk control technique that isolates loss exposures from one another to minimize the adverse effect of a single loss.
Define duplication.
A risk control technique that uses backups, spares, or copies of critical property, information, or capabilities and keeps them in reserve.
Define diversification.
A risk control technique that spreads loss exposures over numerous projects, products, markets, or regions.
Define insurance.
A risk management technique that transfers the potential financial consequences of certain specified loss exposures from the insured to the insurer.
Define hazard.
A condition that increase the frequency or severity of risk.
Define tangible property.
Property that has a physical form.
Define intangible property.
Property that has no physical form.
Define property-casualty insurance.
One out of two main-sectors of the insurance industry encompassing numerous types of insurance, most of which cover the financial consequences of damage to one’s own property or legal liability to others.
Define property
The real estate, buildings, object or articles, intangible assets, or rights with exchangeable value of which someone may claim legal ownership.
Define liability.
A legal re
