Module 1 Flashcards
Which of the following correctly describes people who prefer to minimise the risks they are exposed to?
Risk-averse
The 3 natures of risk are…
Concepts, categories, components
3 stages of risk management are…
Identification, analysis, control
Insurance acts as a…
Risk transfer mechanism
Declan, a firm’s risk manager, has already designed a process to enable supervisors to spot errors and irregularities that have occurred in the manufacturing process. His next task is to create a process to ensure that once errors and irregularities are spotted, they are put right.
This new internal risk control process is an example of a…
Corrective control
What does MIAFTR stand for?
Motor Insurer’s anti-Fraud and Theft Register
What 3 things determine if a risk is insurable?
Fortuitous event
Insurable interest
Not against public policy
The 3 categories of risk are…
Financial or non financial
Pure or speculative risk
Particular or fundamental
The three components of risk are…
Uncertainty
Level of risk
Peril and hazard
Level of risk is made up of…
Frequency
Severity
Define Peril
Cause of a loss
Define Hazard
Influences the operation or effect of the peril (i.e. something that makes it worse)
The two types of hazard are…
Physical and moral
Define moral hazard
Relates to attitudes & behaviour of people
Which are perils?
Holiday
Frost
Car
Fire
Storm
Which are perils?
Flood
No house security
Inexperienced driver
Thatched roof
Explosion
Which are moral hazards?
Bin of wastepaper
Firework factory
Hasty builder
Thatched roof
Dishonest employee
Which are physical hazards?
Poor employee relations
Unhygenic cook
Heavy smoker/drinker
Unoccupied house
Loose carpeting
Five benefits of insurance
Cash flow
Business expansion
Loss control
Premiums invested
Social benefits
Define Co-insurance
Where risk is shared between insurers
Who is exempt from authorisation under FCA rules and why?
Chartered accountant
Broker representative
Insurer representative
Broker
Another person or firm takes responsibility for their actions
Define dual insurance
When two or more policies cover the same risk
Define self insurance
When an individual or company decides against transferring risk in favour of funding it themselves
