Introduction to Risk Management

Question 1

Probability

Answer 1

The likelihood that an outcome or event will occur

Question 2

Loss exposure

Answer 2

Any condition or situation that presents a possibility of loss, whether or not an actual loss occurs

Question 3

Hazard

Answer 3

A condition that increases the frequency or severity of a loss

Question 4

Moral hazard

Answer 4

A condition that increases the likelihood that a person will intentionally cause or exaggerate a loss

Question 5

Morale hazard (attitudinal hazard)

Answer 5

A condition of carelessness or indifference that increases the frequency or severity of loss

Question 6

Physical hazard

Answer 6

A tangible characteristic of property, persons, or operations that tends to increase the frequency or severity of loss

Question 7

Legal hazard

Answer 7

A condition of the legal environment that increases loss frequency or severity

Question 8

Property loss exposure

Answer 8

A condition that presents the possibility that a person or an organization will sustain a loss resulting from damage (including destruction, taking, or loss of use) to property in which that person or organization has a financial interest

Question 9

Tangible property

Answer 9

Property that has a physical form

Question 10

Real property (realty)

Answer 10

Tangible property consisting of land, all structures permanently attached to the land, and whatever is growing on the land

Question 11

Personal property

Answer 11

All tangible or intangible property that is not real property

Question 12

Intangible property

Answer 12

Property that has no physical form

Question 13

Liability loss exposure

Answer 13

Any condition or situation that presents the possibility of a claim alleging legal responsibility of a person or business for injury or damage suffered by another party

Question 14

Personnel loss exposure

Answer 14

A condition that presents the possibility of loss caused by a person’s death, disability, retirement, or resignation that deprives an organization of the person’s special skill or knowledge that the organization cannot readily replace

Question 15

Personal loss exposure

Answer 15

Any condition or situation that presents the possibility of a financial loss to an individual or a family by such causes as death, sickness, injury or unemployment

Question 16

Net income loss exposure

Answer 16

A condition that presents the possibility of loss caused by a reduction in net income

Question 17

Pre-loss goals

Answer 17

Goals to be accomplished before a loss, involving social responsibility, externally imposed goals, reduction of anxiety, and economy

Question 18

Post-loss goals

Answer 18

Risk management program goals that should be in place in the event of a significant loss