Chapter 6 Risk Management Flashcards
Name the 5 steps to developing a risk management program
Identify and analyze loss exposure
Examine alternative risk management techniques
Select risk management technique
Implement technique
Monitor results
Define Risk Management
The process of making and carrying out decisions that will minimize the adverse effects of accidental losses to an organization.
What are 2 dimensions of the risk management process
- A decision process
drives the most cost effective means available to deal with loss exposures
2.Management or administrative process
relies on the organizations ability to plan, organize ,lead and control
What type of results can a broker achieve if they use the risk management approach?
A more informed clientele
Increased retention
Increased referrals
Increased claim satisfaction
Reduction in errors and omissions
Identify the purpose of Identification and Analysis
Identification: Recognizing the loss that might occur
Analysis: estimating the likely significance of those possible losses
What are 3 classifications of loss exposures?
Type of value exposed to the loss
Peril causing the loss
financial consequences of the loss
Name 4 broad categories of possible values subject to a loss
Property values
Net income values
Liability loss
Personnel loss
Name 2 types of property values
Tangible property
Intangible property
Tangible Property
Property that is real, can be touched, forms a substance
Real Property
Land and what is growing on or affixed to the land
Personal Property
Includes all tangible property other then real estate
EX money, stocks , furniture
Debris removal
Removing debris after a loss to restore property
Demolition expense
Damage so severe bylaws required undamaged portion to be demolished
Undamaged property
Property undamaged when loss occurs but may decline in value or be rendered useless
Increased cost of construction
Building codes continuously being revised
cost to meet new building code standards