Risk Flashcards
Risk
defined as thepotential or uncertainty for loss.
Speculative risk
a risk that presents the chance for both loss and gain. Speculative risks are not insurable.
Pure risks
present a potential for loss only with no possibility of gain. Only pure risks are insurable.
Standard risks
have an average potential for loss, are typically insured with a predetermined standard premium.
Substandard risks
considered to be a poor risk for the insurance company and have a higher potential for loss.may be insured with an increased premium, a lower benefit, or could be declined altogether.
Preferred risks
considered to be great for the insurance company and have a lower potential for loss, may be offered a lower premium for the transfer of their risk.
risk management.
The process of analyzing exposures that create risk and designing programs to handle them
Risk Avoidance
Risk can be avoided by eliminating a hazard.
Risk Retention
Risk can be retained through self-insurance. Self-insurance is typically used when losses are highly predictable, and the worst possible loss is not severe.
Risk Transfer
Risk can be transferred or passed from one party to another. Buying insurance is the best way to transfer risk.examples include incorporation and hold-harmless clauses.
Risk Sharing
Risk can be shared by multiple parties. Each party assumes a portion of the risk receiving benefits under the system.Insureds share in the risk of medical expenses through copayment and deductible cost-sharing programs.
Risk Pooling
known as loss sharing, spreads risk by sharing the possibility of loss over a large number of people.
Reinsurance
defined as the spreading of risk from one insurer to one or more other insurers. Many insurers are able to minimize exposure to substantial loss by reinsuring risks.
Prevention
involves taking actions to eliminate damage or loss. It is a method used to identify and analyze risk and to control losses.
