COMPONENTS OF RISK

Question 1

Why does the annual report and accounts of many organisations now include a section on ‘Principal Risks’?

Answer 1

To inform potential investors and to comply with regulations or stock exchange rules

Question 2

A factory making lighters is inspected and found to have excellent safety protocols and good training for staff. Do the protocols and training show good physical or moral hazard?

Answer 2

Good moral hazard

Question 3

What are dread risks?

Answer 3

Those which people dread, risks people feel they have little control over and have dreadful consequences, often described as Catastrophic risks. Examples are nuclear accidents and skyscraper fires

Question 4

What does the term ‘group think’ refer to?

Answer 4

When individuals are in a group and depart from their expected response to conform to group pressure, consciously or unconsciously