Risk Quiz 2 Flashcards
Assumption of Risk
One recognizes the danger involved in an activity
Ex) Going skydiving
Comparative/Contributory Negligence
The plaintiff was partially to blame for what happened
Res Ipsa Loquitur
“The thing speaks for itself”
- It is what it is
- Reverses the burden of proof from the plantiff to the defendant
Vicarious Liability
One person becomes legally liable for the negligent behavior of another
Ex) Employers are held liable for the actions of their employees acting as employees
Joint and Several Liability
Negligence of two or more parties contributes to the injury or damage
Product Liability
Manufacturers of a faulty product that injures someone or damages property may be held legally liable
Negligence
- Property is negligently made or improperly designed
- Proper warning is not given
Product Liability Losses
Cost of defending and paying claims for injury caused by a product
Premises Liability
The owner or tenant may be held liable for damages if someone is injured
Trespasser
Someone comes on property without right and consent - only obligation of owner is to abstain from doing intentional harm
Licensee
- Comes onto the property without the knowledge of the owner
- No purpose of or benefit to the owner
- Must warn of any hidden dangers
Social Guest/Invitee
- Been invited for some purpose
- Customer in store
- Must keep premises safe so no harm comes
Liquor Liability
Businesses that manufacture, sell, and serve alcohol
- Injuries resulting to patron/guests from selling alcohol
Dram Shop Laws
- Can hold businesses liable if they over-serve someone and subsequently leave and injure someone
Animal Liability
- Exotic animal
- Strict liability
- Dogs
Traditional Risk Management
- 4 loss exposures
- Property, net income, personnel, liability
- Silo approach (teams dont share information with each other)
- Focus on mostly pure insurable risks
Ownership Interest
- Has either present or future ownership interest
- Future, when you have a car loan or mortgage
Secured Creditor
- The bank or lender when you take a loan for a house/car
- They hold a title - i.e. they own it
Buyers and Sellers
Shipping Products
Bailee Interest
- A bailee is an entity that receives property from another for a business
- A bailee is the owner of the property
Tenant Interest
- Contained use interest
- Responsible for returning the property in reasonable condition
Ex) Security deposit should be returned if the property is in reasonable condition
Net Income Loss Exposure
- A firm suffers a primary loss - as the result suffers a secondary loss that results in indirect expenses
Ex) Losing a large customer
Personnel Loss Exposure
- Risk that an organization will suffer losses due to key employees suffering a loss
Ex) Employee suffers illness, death, disability, retirement, resignation, etc.
Negligence and Legal Liability
- Wealth losses from liability exposure
- Money loss from being sued
- Legal fees
When is legal liability established
- There was negligence
- There was actual damage or loss
What constitutes negligence?
- Failure of a person to exercise the proper degree of care
- The burden of proof is on the injured party
- Situations with children
Measurement Issue
- Usually easy to establish injury or damage occurred
- Hard to establish the amount of damage
Property loss/damage (PD)
- Relatively simple to calculate
Bodily Injury (BI)
- Moderately difficult to calculate
- Special damages
General Damages
- Compensate for intangible losses
- Pain and suffering
- Mental anguish
Punitive Damages
- Amounts assessed as a form of punishment
- Gross negligence is involved
- Very difficult to estimate and measure
ERM
- Risk-based approach to managing an enterprise
- 4 quadrants of risk
- Hazard, financial, operational, and strategic
Hazard Risks
The potential for harm from something in the workplace that is not under the control of the business
Financial Risks
- Inflation
- Foreign exchange rates/currency
- Stock market
- Interest rates
- Volatility
- Liquidity
NOT NET INCOME LOSSES
Operational Risks
- Manufacturing products
- Supply chain issues
- Regulatory issues
- Workplace violence
Strategic Risks
The internal and external events that may make it difficult, or even impossible, for an organization to achieve their objectives and strategic goals
How to identify exposures
1) Inspect the facility
2) Contract analysis
3) Look at past information
4) Share loss information with other similar organizations
5) Saftey checklist from insurance companies
6) Flow chart approach
7) Ask employees/managers in the firm
8) Financial statement approach
Strict Liability
- Says in certain situations liability is assigned regardless of fualt
