Chapter 8 Risk Treatment

Question 1

Loss prevention

Answer 1

Arrest control technique that reduces the frequency of a particular loss

Question 2

Lost reduction

Answer 2

Arrest control technique that reduces the severity of a particular loss

Question 3

Retention

Answer 3

A risk financing technique that involves assumption of risk in which gains and losses are retained within the organization

Question 4

Risk financing

Answer 4

A conscious act or decision not to act that generates the funds to offset the variability in cash flows that may occur as an outcome of risk

Question 5

Transfer

Answer 5

In the context of risk management a risk financing technique by which the financial responsibility for lost in the variability in cash flows is shifted to another party

Question 6

Risk

Answer 6

Uncertainty about outcomes that can be either negative or positive

Question 7

Future contract

Answer 7

And exchange traded agreement to buy or sell a commodity or security at a future date at a price that is fixed at the time of the agreement