RISK MANAGEMENT Flashcards
What is AIRMIC?
Association of Insurance and Risk Managers in Industry and Commerce.
Who influenced publication of a Risk Management Standard?
AMIRMIC
What is the importance of good risk management?
- It reduces the potential for loss
- It gives shareholders a greater degree of confidence in a company’s ability to manage its risks.
- It provides a disciplined approach to quantifying risks.
What are the 3 key steps in the risk management process?
- Identification
- Analysis
- Control
What is Risk IDENTIFICATION?
Discovering present + potential threats.
For conventional risks, how may an insurer identify a potential risk?
By carrying out a physical examination or survey.
What is risk ANALYSIS?
Risk managers will examine past data to evaluate or analyse the risk.
What is risk CONTROL?
If the risk is seen to have the potential for adverse consequences, some course of action should be put in place to control, reduce or even eliminate the risk.
What are the 3 aspects to controlling the risk?
- Physical control measures
- Financial control measures
- Developing a good risk culture
Example of a PHYSICAL control measure?
Putting specific locks on the doors of a factory to reduce risk of theft.
Example of a FINANCIAL control measure?
Transferring the risk by taking out insurance or by contract.
Example of developing a good risk culture?
Educating employees or clients on how to avoid or reduce risks.
What are the 3 internal controls?
- Detective
- Corrective
- Preventative
What are DETECTIVE controls?
Detect errors or irregularities that may have occurred.
What are CORRECTIVE controls?
Correct errors or irregularities that have been detected.
