Week 6

Question 1

Whats residual risk?

Answer 1

The risk which still remains after you have mitigated a lot of the risk

Question 2

What is captive insurance?

Answer 2

Like mutual insurance or proprietary insurance, it is the idea that a company makes its own insurance company to take claims out rather than using another insurer and claiming off of them.

Question 3

What are 4 alternates to insurance?

Answer 3

Retention (money set aside for risk), derivatives, capital insurance (start own insurance company) and contractual risk transfer (for ex builders may call in workers to build quicker for time target risk lowering)

Question 4

What could you use to predict frequency and risk severity?

Answer 4

Heinrichs triangle model

Question 5

What are the 3 risk management?

Answer 5

Risk analysis, risk control and risk finance

Question 6

What is TARA model?

Answer 6

A framework in risk management

Question 7

What does the TARA model stand for?

Answer 7

T- Transfer
A- Accept
R- Reduce
A- Avoid

Question 8

What might direct vs indirect costs for insurance be and examples?

Answer 8

Direct- The cost of a claim you have to pay

Indirect- The cost of time and operational time because employees went home sick, ford launch a car costing 11 billion and it has major break defects and must be recalled

(seen vs unforeseen)

Question 9

What are the two classes of risk financing?

Answer 9

Retention and transfer (of insurance)

Question 10

A company is trying to build a house, however they are running out of time and the contract states it’s to be done in 5 days. The company however transfers this to a contractor. What have they used?

Answer 10

Contractural risk transfer