Intro to risk management Flashcards
What is the attitude where an investment is chosen if it has more certainty but possibly lower returns?
Risk averse attitude
What is the attitude where an investment would be chosen according to the expected return, regardless of the risk?
Risk neutral attitude
What is the attitude where an investment would be chosen on the basis of it offering higher levels of risk, even if its expected return is lower than an alternative?
Risk seeker attitude
What are the three types of risk?
Business risk
Financial risk
Operational risk
What are the four types of event risk?
Disaster
Regulatory
Reputation
Systemic
What is the formula for the coefficient of variation?
sd/mean
What does a lower coefficient of variation imply?
better risk-return trade-off
What are the five types of loss?
Property Personnel Pecuniary Liability Interruption
What is the formula for gross risk?
gross risk = probability X impact
What does TARA stand for?
Transfer
Avoid
Reduce
Accept
What risk response should you take for a risk with:
Low probability and low impact
Accept
What risk response should you take for a risk with:
low probability and high impact
transfer/reduce
What risk response should you take for a risk with:
high probability and low impact
reduce
What risk response should you take for a risk with:
high probability and high impact
transfer/avoid/reduce
What are the four metrics to measure resiliance?
Compliance
Completeness
Comparability
Value
