Module 2: Risks, Risk Management, Recruiting Personnel, Federal Legislation for Employees, Training & Compensation (Q3) Flashcards
Risk
The possibility of suffering harm or loss
Business Risk
The possibility of losses associated with the asset and earning potential of a firm
Market Risk
The uncertainty (gain or loss) associated with an investment decision
Pure Risk
The uncertainty associated with a situation where only loss or no loss can occur
- There is no potential for gain
- Only pure risk is insurable
Types of Pure Risks
- Property Risks
- Liability RIsks
- Personbnel Risks
Types of Property
Real Property
Personal Property
Real Property
Land and anything attached to the land, such as buildings
Personal Property
Any property other than real property, including machinery, equipment, inventory, and vehicles
Ways that property can be valued (appraised)
- Replacement Value of Property
- Actual Cash Value (ACV)
Replacement Value of Property
The cost of replacing personal property and rebuilding real property at today’s price
Actual Cash Value (ACV)
An insurance term that refers to the depreciated value of the property
Types of Liability
Statutory Liability
Contractual Liability
Tort Liability
Product Liability
Statutory Liability
- Workers’ compensation legislation.
- Laws that obligate an employer to pay employees for injury or illness related to employment, regardless of fault.
Contractual Liability
- Indemnification clause.
- A contractual clause that requires one party to assume the financial consequences of another party’s legal liabilities.
What are torts?
Wrongful acts or omissions for which an injured party can take legal action against the wrongdoer for monetary damages.
What elements must be present for someone to be found guilty of a tort?
- Existence of a legal duty between the parties.
- Failure to provide the appropriate standard of care.
- Presence of injury or damages
- Evidence of Proximate Cause: Evidence of a negligent act that is the clear cause of damages sustained.
Product Liability
Manufacturing Defects
Design Defects
Marketing Defects
Risk Management
- Ways of coping with risk that are designed to preserve the assets and earning power of a firm.
- It is concerned with finding the best possible way to reduce the costs of dealing with risk
Process of Risk Management
- Identify and Understand Risks
- Evaluate the potential severity of risks
- Select methods to manage risk
- Implement the decision
- Take Action
- Review and Evaluate
Types of Risk Controls
- Eliminate risks
- Minimize Risk
- Shift Risk
- Absorb Risk
Risk Financing
Making funds available to cover losses that can not be eliminated by risk control
Risk Financing
Making funds available to cover losses that can not be eliminated by risk control
Risk Transfer
Risk Retention
Self-Insurance
Types of Insurance
- Property Insurance
- Commercial General Liability Insurance (CGL)
- Automobile Insurance
- Workers’ Compensation Insurance
- Health Insurance
- Key-Person Life Insurance
- Disability Insurance
Types of Property Insurance
- Named-Peril Approach
- All-Risk Approach
- Coinsurance Clause
- Business Interruption Insurance
Commercial General Liability Insurance (CGL)
Coverage for general liability loss exposure, including premises liability, operations liability, product liability, and completed operations liability.
Automobile Insurance
Coverage designed to provide liability and physical protection for a vehicle
Workers’ Compensation Insurance
Coverage that provides benefits to employees injured at work
Types of Health Insurance
- Health Maintenance Organizations (HMOs)
- Preferred Provider Organizations (PPOs)
Types of Life Insurance
Key-Person Life Insurance
Disability Insurance
Key-Person Life Insurance
Coverage that provides benefits to a firm upon the death of key personnel
Disability Insurance
Coverage that provides benefits to a key employee upon his/her disability
Workplace Diversity
Differences among employees on such dimensions as gender, age, and race
Steps for Selecting Employees
- Use application forms
- Interview the applicants
- Check references and other background information, and social media
Job Analysis
The process of determining the critical components of a job for the purpose of selecting, training, and rewarding personnel
Job Description
An outline, or summary, of the work to be performed for a particular position
Job Specification
A list of the knowledge, skills, abilities, and other characteristics needed to perform a specific job
Civil Rights Act
- Legislation prohibiting discrimination based on race, color,religion, sex, or national origin.
- Applies to any employer or union with 15 or more employees
Age Discrimination in Employment Act
- Prohibits discrimination in employment against those over 40 years of age
- Applies to employers with 20 or more employees, unions with 25 or more members, employment agencies, federal, state, and local governments
Equal Pay Act
- Prohibits discrimination in pay based on the sex of the worker
- Applies to employers who engage in interstate commerce and most federal, state, and local governments
Vietnam Era Veteran Readjustment Act
- Prohibits discrimination in employment against Vietnam-era veterans.
- Applies to federal government contractors with contracts over $10,000
Immigration Reform Act
- prohibits non-documented persons from employment in the United States
- Applies to all employers
Americans with Disabilities Act (ADA)
- Prohibits discrimination against any qualified individual with a disability
- Applies to firms with over 15 employees
Fair Labor Standards Act (Wage and Hour)
- Federal law that establishes a minimum wage and provides for overtime pay.
- Applies to all businesses
Occupational Safety and Health Act (OSHA)
Legislation that regulates the safety of workplaces and work practices.
Family and Medical Leave Act
- Legislation that assures employees of unpaid leave for childbirth or other family needs
- Applies to all businesses
Employee Training
Planned efforts to help employees master
the knowledge, skills, and behaviors they need to perform their duties.
Management Development
- Preparation of employees for career advancement through education, job experiences, network development, and performance assessment.
On-The-Job Training
Instruction at the place of employment,
supervised by a professional trainer or experienced employee.
Types of Employee Compensation
- Wage and Salary Levels
- Financial Incentives
- Stock Incentives
- Employee Benefits
Types of Employee Compensation
- Wage and Salary Levels
- Financial Incentives
- Stock Incentives
- Employee Benefits
Piecework
Financial incentives based on the number of units produced
Employee Benefits
- Supplements to compensation, designed to be attractive and useful to employees.
- May include such things as vacation time, holidays, health insurance, and retirement compensation.
Insurance
Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses
Worker’s Compensation Insurance
Coverage that provides benefits to employees injured at work
Key Person Life Iinsurance
Coverage that provides benefits to a firm upon the death of key personnel.
Civil Rights Act
Legislation prohibiting discrimination based on race, color, religion, sex, or national origin.
Age Discrimination in Employment Act
Prohibits discrimination in employment against those over 40 years of age
Equal Pay Act
Prohibits discrimination in pay based on the sex of the worker
Immigration Reform Act
prohibits non-documented persons from employment in the United States
Family Medical Leave Act
Legislation that assures employees of unpaid leave for childbirth or other family needs (applies to all businesses)
Bonafide OCC qualification
A qualification that is absolutely necessary for the job. It is an allowed and approved reason for discrimination.
Employment Interview
The primary way of judging the applicants’ appearance, poise, speech, attitude, knowledge, etc
Resume
A brief written account of personal, educational, and professional qualifications and experience, as that prepared by an applicant for a job.
Job Analysis
The process of determining the critical components of a job for the purpose of selecting, training, and rewarding personnel
Job Specification
A list of the knowledge, skills, abilities, and other characteristics needed to perform a specific job
Recruitment
The process of identify and evaluate prospects for employment
Vietnam Era Veterans Readjustment Act
Prohibits discrimination in employment against Vietnam era veterans.
Fair Labor Standards Act
Federal law that establishes a minimum wage and provides for overtime pay.
Employment Application
A record that includes an applicant’s name, address, phone number, social security number, and employment history
