Risk Management Benefits

Question 1

What are the 2 key benefits of risk management to individuals?

Answer 1

1. Reduced financial consequences of risk.

2. Reduced Uncertainty

Question 2

The overall financial consequence for a given asset or activity is the sum of 3 costs

Answer 2

1. Expected cost of losses or gain.
2. Expenditures of risk management.
3. The cost of residual uncertainty.

Question 3

What is Risk Aversion?

Answer 3

All else being equal, individuals prefer certainty to uncertainty, or less risk to more risk.

Question 4

What are the benefits of risk management to Organizations?

Answer 4

1. Protection for financial resources.
2. Increased supplier and customer confidence.
3. Reduce adverse impact of risk

Question 5

What are the benefits of risk management to society?

Answer 5

1. Prevents, minimizes, or compensates for losses.

2. Reduced uncertainty