RISK (U1M3) Flashcards
process that is used to compare risk analysis results with risk criteria in order to determine whether or not a specified level of risk is acceptable or tolerable.
Risk Evaluation
a management tool which accurately assess business exposure
Risk evaluation matrix
support decisions. Risk evaluation involves comparing the results
Risk evaluation
defined the level of identified risk
Wilks and Davis (2000)
suggest the use of a risk evaluation matrix as shown in Figure 1.4 containing four management response options according to the level of identified risk which include risk retention, risk transfer, risk reduction, and risk avoidance
Cuskelly and Auld (1989)
where both the frequency and severity of risk is low,
Risk retention
This is a form of self-insurance, whereby the business operator assumes and accepts a certain level of losses
Risk retention
where risk is identified and a decision is made to retain and pay for any losses from the business operator’s own resources
Risk retention (active)
risks are retained by business operator without the knowledge that they are occurring
Risk retention (passive)
the frequency of risk potential is low, but the severity of a potential incident is high
Risk transfer
severity of a potential risk remains low, but the overall frequency of risk is increasing
Risk reduction
where frequency and severity of risk potential are both high,
Risk avoidance
True or False: Validation may not be necessary regardless of the outcome of risk evaluation.
FALSE
True or False: Risk evaluation support tact-based and science-based decision-making process.
TRUE
True or False: Risk evaluation involves comparing the results of the risk analysis with the established risk criteria to determine where additional action is required.
TRUE
