Lecture 8

Question 1

what are consequential (net income) loss potentials?

Answer 1

conditions that may result in a reduction in revenues and/or increase in expenses due to the disruption of nominal operations caused by some other event (loss)

Question 2

net income exposures

Answer 2

traditionally have represented the reduction in revenues or increase in expenses due to the disruption of normal operations caused by a property loss

Question 3

peril for consequential property loss to property owned by the organization/individual exposed to net income loss

Answer 3

• causing org to be unable to provide services/products when property is unavailable (hotels, restaurants)
• able to provide services/products, but only with increased expenses (transferring patients/generators at a hospital)

Question 4

peril for consequential property loss to property owned by an org./person other than the one exposed to net income loss

Answer 4

supply chain risk
possible counter party risk (other party fails to fulfill in contract)
credit risk

Question 5

key buyer

Answer 5

walmart buys from kimberly clarke (huge source of income for kc)

Question 6

key supplier

Answer 6

farmer cannot provide goods for restaurant (nitty gritty buns)

Question 7

magnet org

Answer 7

one that draws customers and then all the orgs around them benefit (game days)

Question 8

consequential exposures hazards

Answer 8

• uniqueness of underlying property

- extent of dependency on the property-how much of business related to it

Question 9

Peril for consequential liability exposure

Answer 9

report of potential legal liability

• poor public relations (lose customers, incur expenses to keep customers)
• alter currently/potentially productive operations (remove from or never offer product/service, incure additional safety costs)

Question 10

peril for consequential personnel exposure

Answer 10

• reduced revenues due to loss of key employees
• increased expenses to continue to operate despite loss of employee
• reduced income due to reduced morale/productivity

Question 11

hazards for consequential loss due to legal liability or personnel events

Answer 11

• uniqueness (if big portion is from one employee big problem)
• dependency