Class 13 Flashcards

1
Q

Avoidance

A

making decisions with the intention of eliminating either (1) some existing potential for loss or (2) a future potential for loss from a new venture (in essence these are lost opportunities)

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2
Q

risk management tools address

A
  • lost opportunities
  • costs to manage risks
  • loss or risk control costs
  • loss or risk financing costs
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3
Q

risk or loss control

A

actions that reduce frequency or severity of loss (or both)

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4
Q

mechanisms

A

prevention, reduction

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5
Q

prevention

A

any measure that lessens the probability (frequency) of loss but does not eliminate it (bill to outlaw cell phone use while driving)

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6
Q

reduction

A

any effort that lessens the size (severity) of losses that do occur (click it or ticket)

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7
Q

pre-loss

A

actions taken prior to loss, even though effect is realized only when loss occurs (crisis management)

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8
Q

segregation

A

lower an org’s dependence on any single asset, activity, or person and as a result each loss is smaller in size (and probably more predictable)

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9
Q

examples of segregation

A

separation and duplication

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10
Q

separation

A

divide assets or activities into 2 or more separate units (diversification)

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11
Q

examples of something that is both prevention and reduction

A

speed limits, holes in the top of legos

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12
Q

duplication

A

reproduce an orgs assets or facilities with the duplicate intended solely as a back up (with more units, this action may increase frequency)

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13
Q

crisis management

A

plans of action to prepare for an emergency

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14
Q

post-loss

A

actions taken after a loss occurs (legal defense, rehabilitation, etc)

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15
Q

heinrich’s domino theory

A

focus on behavior

  • problem begins with social environment
  • the social enviro leads to fault in people
  • fault in people results in unsafe act/condition
  • unsafe act/condition (hazard) leads to an accident
  • the accident results in injury/damage
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16
Q

which aspect of heinrich’s domino theory should orgs focus on?

A

the third- fault in people results in unsafe condition (its too hard to change the first 2; 3rd is best attempt to prevent last domino from falling)

17
Q

what do the theories do

A

put in mechanisms to protect employees not change their desires

18
Q

haddon’s release of energy theory

A

focus on physical environment

  • accidents result from the release of excess energy
  • loss control is possible by:
    • suppressing build up of energy, such as limiting the speed of cars
    • enhancing accident retarding conditions, such as installing airbags in cars_
19
Q

risk or loss financing

A

paying for losses not avoided/prevented (may use pooling to reduce risk)

20
Q

retain

A

do not shift risk, but rather pay for losses directly out of own funds as they occur

21
Q

transfer

A

shift risk (variability in loss payment) to another party

22
Q

proper tool selection is dependent on what?

A
  • results of setting objectives
  • measurement/assessment of potential outcomes
  • costs/benefits of tools
  • coordination with other tools chosen
23
Q

if you choose not to control a problem should you still worry about financing?

A

yes! there may still be negative outcomes that we have to pay for

  • the probability of loss has to be positive so there will always be something to pay
    • always plan on financing **