Class 13

Question 1

Avoidance

Answer 1

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)

Question 2

risk management tools address

Answer 2

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

Question 3

risk or loss control

Answer 3

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

Question 4

mechanisms

Answer 4

prevention, reduction

Question 5

prevention

Answer 5

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

Question 6

reduction

Answer 6

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

Question 7

pre-loss

Answer 7

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

Question 8

segregation

Answer 8

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)

Question 9

examples of segregation

Answer 9

separation and duplication

Question 10

separation

Answer 10

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

Question 11

examples of something that is both prevention and reduction

Answer 11

speed limits, holes in the top of legos

Question 12

duplication

Answer 12

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

Question 13

crisis management

Answer 13

plans of action to prepare for an emergency

Question 14

post-loss

Answer 14

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

Question 15

heinrich’s domino theory

Answer 15

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

Question 16

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

Answer 16

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)

Question 17

what do the theories do

Answer 17

put in mechanisms to protect employees not change their desires

Question 18

haddon’s release of energy theory

Answer 18

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_

Question 19

risk or loss financing

Answer 19

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

Question 20

retain

Answer 20

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

Question 21

transfer

Answer 21

shift risk (variability in loss payment) to another party

Question 22

proper tool selection is dependent on what?

Answer 22

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

Question 23

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

Answer 23

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 **