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ERM - Midterms > ERM - Lesson 2 > Flashcards

ERM - Lesson 2 Flashcards

Risk Identification

1
Q

The key to risk identification is _________

A

Systematic and Continuous Process

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2
Q

An important issue in exposure identification, and one that ties together pure risk exposures and ERM exposures.

A

Critical Dependency

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3
Q

An element of an entity’s operations that has the capacity to interrupt the entire production process.

A

Critical Dependency

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4
Q

Are property, liability, and human resources exposures

A

Pure Risk Exposures

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5
Q

Are hazard risks (essentially, the pure risk exposures), financial risks, operational risks, and strategic risks

A

ERM exposures

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6
Q

4 ERM Exposures

A
  1. Hazard risks (essentially, the pure risk exposures)
  2. Financial risks
  3. Operational risks
  4. Strategic risks
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7
Q

Is the most important step in the risk management process.

A

Risk Identification

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8
Q

Is the key to choosing correct risk-handling procedures

A

Risk Identification

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9
Q

A key part of the risk identification is to look for?

A

Critical Dependencies

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10
Q

WTC or death of Michael Jackson is an example of?

A

Hazard Risks - (essentially pure risks)

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11
Q

Credit crisis started in an obscure part of real estate financing, inflation, currency exchange is an example of?

A

Financial Risks

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12
Q

Supply chain disruption is an example of?

A

Operational Risks

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13
Q

Reputation loss and product development is an example of?

A

Strategic Risks

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14
Q

3 Useful Methods

A
  1. Identify and Measure (evaluate).
  2. Choose most efficient tool(s) for Control
  3. Implement and Review
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15
Q

2 Useful Methods of Risk Identification

A
  1. Distinguish between internal and external exposures
  2. Distinguish between pure and speculative risks
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16
Q

2 Elements Under Distinguish between internal and external exposures

A
  1. Location
  2. Ability to control
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17
Q

Damage, destruction, loss of use, liability claim

A

Direct Losses

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18
Q

Inability to generate income, operation of law or ordinance

A

Indirect Losses

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19
Q

2 Types of Property Risks

A
  1. Tangible property
  2. Intangible property
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20
Q

Examples of Intangible Property

A
  1. Patents
  2. Trademarks
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21
Q

Distinguished for crimes and breach of contract)

A

Tort Liability

22
Q

Types of damages

A
  1. Compensatory (special [economic], general [noneconomic])
  2. Punitive
23
Q

2 Types of Compensatory Damage

A
  1. Special [economic]
  2. General [noneconomic])
24
Q

Defenses in negligence suits

A
  1. Contributory, or comparative, negligence
  2. Assumption of risk
25
Q

3 Types of Human Resources Risks

A
  1. Key employee
  2. Workers’ compensation
  3. Employee benefits programs
26
Q

3 Types of Measure (evaluation)

A
  1. Maximum possible loss
  2. Maximum probable loss
  3. Relative Frequency
27
Q

The absolute maximum dollar amount of damage

A

Maximum possible loss

28
Q

A conservative estimate of what is likely to occur in a worst case loss

A

Maximum probable loss

29
Q

An estimate (numerical or verbal) as to the number of times the loss will occur.

A

Relative Frequency

30
Q

Replacement value versus book value versus actual cash value versus market value.

A

Valuing Property

31
Q

The impact of _________ on values.

A

Inflation

32
Q

6 Examples of loss sources under Liability Risks

A
  1. Breach of contract
  2. Bodily injury or personal injury
  3. Intentional damage to reputation
  4. Wrongful hiring, firing, sexual harassment, invasion of privacy, age discrimination
  5. Vicarious liability
  6. Products, environmental, workers’ compensation.
33
Q

3 Categories Under Torts

A
  1. Deliberate or Intentional Interference
  2. Liability Without Fault (Strict and Absolute Liability)
  3. Negligence
34
Q

Liability Without Fault also called as

A

Strict and Absolute Liability

35
Q

4 Examples of Deliberate or Intentional Interference

A
  1. Assault
  2. Battery
  3. Liable
  4. False arrest
36
Q

Can result in civil as well as criminal actions

A

Deliberate or Intentional Interference

37
Q

Laws or court precedent mandate liability in some circumstances: explosives, dangerous
animals

A

Liability Without Fault (Strict and Absolute Liability)

38
Q

Worker’s compensation, pure no-fault

A

Liability Without Fault (Strict and Absolute Liability)

39
Q

Failing to use reasonable care according to a “reasonable man” standard

A

Negligence

40
Q

A reasonable person thinks before speaking or acting, and is honest and moderate in all activities

A

Negligence

41
Q

Negligence is a question of ________

A

Question of fact

42
Q

Other parties can be held liable in two types

A
  1. Vicarious liability
  2. Joint-and-several liability
43
Q

3 Types of Damages

A
  1. Compensation for Personal Injuries
  2. Punitive Damages
  3. Punitive damages against insurers
44
Q

Includes medical, lost wages, future wage loss, and pain and suffering

A

Compensation for Personal Injuries

45
Q

Compensation to punish a defendant for outrageous acts

A

Punitive Damages

46
Q

When insurers act in bad faith in resisting an insured’s legitimate claim

A

Punitive damages against insurers

47
Q

Loss of life’s pleasures

A

Hedonic damages

48
Q

Aside from the 3 kinds of damages, what are the 2 other damages?

A
  1. Hedonic damages
  2. Mental anguish
49
Q

5 Human Resource Risks

A
  1. Loss of Key Person
  2. Disability
  3. Loss of Health
  4. Unplanned retirement
  5. Results in loss of income, business continuation problems, replacement and training issues.
50
Q

Physical (medical) or mental

A

Disability

51
Q

2 Types Under Disability

A
  1. Short or Long term
  2. Permanent or Temporary
52
Q

7 Categories Under Regularly Review and Update the Process

A
  1. New assets or disposal of assets
  2. Valuation changes
  3. New products, processes, and operations
  4. New personnel
  5. Law changes
  6. Currency fluctuations
  7. New contractual relationships

ERM - Midterms (5 decks)

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