RIsk Topic 4 Flashcards
What is risk control?
Ways of reducing the frequency and severity of the loss
- Dec. COV
- Improve the predictability of the loss
What is Reactive Avoidance?
Stop engaging in the activity that causes loss
What is Proactive avoidance?
Never engage in the risk that causes a loss
What is True Avoidance?
Completely reduce the risk to zero
What are some problems with the avoidance strategy?
- Some risks can’t be avoided (Ex. Death)
- Might lose out on some profits (opportunity cost)
When is avoidance a good strategy?
With high frequency, high severity claims (Ex. Driving drunk)
What is loss prevention?
Attempts to reduce the frequency or probability of the loss (Ex. safety inspections and security guards)
Loss Reduction
Reduces the severity of the loss (Ex. Wearing a helmet while riding a bicycle)
What are some examples of detection devices?
- Smoke detectors
- Alarm systems
What are some examples of private protection?
Portable fire extinguishers, standpipes, fire pumps, sprinkler systems, building construction
What is a standpipe?
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)
What are the two types of standpipes?
Wet and dry
What is the purpose of fire pumps?
- Used as a supplemental water supply
- Used when public water supply is not enough
- Linked to standpipes and sprinklers
What is the purpose of a sprinkler?
To contain the fire (prevent it from spreading further)
How are sprinklers activated?
By heat, they individually activate (don’t all come on at the same time like you see in the movies)
How does building construction play a role in risk control?
Some constructions hold up better than others (Ex. Fire resistive buildings are very safe and don’t often collapse)
What are some public protections provided for loss reduction?
A public fire department and fire hydrants
What are some post-loss reduction activities?
Salvage operations, legal defenses, crisis management, and rehabilitation of injured workers
What is separation of exposure units?
When you break items down into smaller parts (Ex. Training multiple people to do a job)
What is the goal of seperatin of exposure units?
To limit the size of the loss from one event
- Works well to reduce net income loss exposure
What is duplication of exposure units?
When an exact copy of something is made and kept in reserve
What is risk transfer?
Shift the exposure to loss to a third party (Ex. Sell your car that breaks down all the time to your friend)
What is a wet standpipe?
A wet standpipe is a standpipe that always has water and is always pressurized (can get water right away)
What is a dry standpipe?
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
