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Chapter One Risk & its Treatment - Coggle Diagram
Chapter One Risk & its Treatment
Definitions of Risk.
Objective Risk
Subjective Risk
Chance of loss
Objective Probability
Subjective Probability
Chance of Loss Versus Objective Risk
peril and hazard
Peril
Hazard
Physical hazard
■ Moral hazard
■ Attitudinal hazard (morale hazard)
■ Legal hazard
Classification of Risk
Pure and speculative risk
■ Diversifiable risk and nondiversifiable risk
■ Enterprise ris
Major Personal & Commercial Risk
Personal Risks
Premature death
■ Insufficient income during retirement
■ Poor health
■ Unemployment
Property Risks
Direct Loss
Indirect or Consequential Loss
Liability Risks
Commercial Risks
liability r
loss of business income
other risks
Crime exposures
Human resources exposures.
Foreign loss exposures
Intangible property exposures.
Government exposures.
Burden of Risk on Society
he size of an emergency fund must be increased.
■ Society is deprived of certain goods and services.
■ Worry and fear are present.
Techniques for managing risk
Risk Control
Avoidance
■ Loss prevention
■ Loss reduction
Risk Financing
Retention
Active Retention
Passive Retention
Self-Insurance
■ Noninsurance transfers
Transfer of risk by contracts
■ Hedging price risks
■ Incorporation of a business firm
■ Insurance