RIsk Topic 4

Question 1

What is risk control?

Answer 1

Ways of reducing the frequency and severity of the loss
- Dec. COV
- Improve the predictability of the loss

Question 2

What is Reactive Avoidance?

Answer 2

Stop engaging in the activity that causes loss

Question 3

What is Proactive avoidance?

Answer 3

Never engage in the risk that causes a loss

Question 4

What is True Avoidance?

Answer 4

Completely reduce the risk to zero

Question 5

What are some problems with the avoidance strategy?

Answer 5

• Some risks can’t be avoided (Ex. Death)
• Might lose out on some profits (opportunity cost)

Question 6

When is avoidance a good strategy?

Answer 6

With high frequency, high severity claims (Ex. Driving drunk)

Question 7

What is loss prevention?

Answer 7

Attempts to reduce the frequency or probability of the loss (Ex. safety inspections and security guards)

Question 8

Loss Reduction

Answer 8

Reduces the severity of the loss (Ex. Wearing a helmet while riding a bicycle)

Question 9

What are some examples of detection devices?

Answer 9

• Smoke detectors
• Alarm systems

Question 10

What are some examples of private protection?

Answer 10

Portable fire extinguishers, standpipes, fire pumps, sprinkler systems, building construction

Question 11

What is a standpipe?

Answer 11

Water pipe systems are built into buildings to fight fires (they make it so that firefighters don’t have to carry hose up every floor)

Question 12

What are the two types of standpipes?

Answer 12

Wet and dry

Question 13

What is the purpose of fire pumps?

Answer 13

• Used as a supplemental water supply
• Used when public water supply is not enough
• Linked to standpipes and sprinklers

Question 14

What is the purpose of a sprinkler?

Answer 14

To contain the fire (prevent it from spreading further)

Question 15

How are sprinklers activated?

Answer 15

By heat, they individually activate (don’t all come on at the same time like you see in the movies)

Question 16

How does building construction play a role in risk control?

Answer 16

Some constructions hold up better than others (Ex. Fire resistive buildings are very safe and don’t often collapse)

Question 17

What are some public protections provided for loss reduction?

Answer 17

A public fire department and fire hydrants

Question 18

What are some post-loss reduction activities?

Answer 18

Salvage operations, legal defenses, crisis management, and rehabilitation of injured workers

Question 19

What is separation of exposure units?

Answer 19

When you break items down into smaller parts (Ex. Training multiple people to do a job)

Question 20

What is the goal of seperatin of exposure units?

Answer 20

To limit the size of the loss from one event
- Works well to reduce net income loss exposure

Question 21

What is duplication of exposure units?

Answer 21

When an exact copy of something is made and kept in reserve

Question 22

What is risk transfer?

Answer 22

Shift the exposure to loss to a third party (Ex. Sell your car that breaks down all the time to your friend)

Question 23

What is a wet standpipe?

Answer 23

A wet standpipe is a standpipe that always has water and is always pressurized (can get water right away)

Question 24

What is a dry standpipe?

Answer 24

A dry standpipe does not constantly have water in it
- If a building is under 50 ft it is not required to have a wet one