C11 Additional Material

Definitions

1. C 11 Additional resource 1
2. C 11 Sample exam
3. C 11 Mid Term Exam

Term What is the difference between risk and chance?	Definition Risk implies doubt about the outcome in a given situation, put the outcome is with risk is negative, a loss might occur. Change also implies doubt about the outcome in a given situation but the difference is the outcome is normally a favorable one to us.
Term Define Risk	Definition Risk implies some form of uncertainty about an outcome in a given situation. An event might occur and if it did the outcome might not be favorable to us. The possibility of loss.
Term Explain how uncertainty is related to risk	Definition Uncertainty implies doubt about the future. It is based on a lack of knowledge. The basis of risk is lack of knowledge. If we always knew what was going to happen there would be no risk. We operate in an uncertain or risky environment.
Term Define peril. Name two examples.	Definition A peril is an event that will give rise to a loss. ex. Flood, theft, fire, storm, accident and vandalism are all perils.
Term Define Hazard. Give two examples.	Definition Hazard is a factor which may influence the outcome of a loss. Hazards are not the cause of the loss, but they can increase the likelihood of a peril operating. ex. Wet floors(someone could slip and fall), flammable debris piled near the furnace in the basement will provide ready fuel should a spark escape, poorly maintained heating and air conditioning systems, use of damaged extension cords and overfusing are hazardous conditions and are more likely to result in a fire.
Term Define Hazard. Give two examples.	Definition Hazard is a factor which may influence the outcome of a loss. Hazards are not the cause of the loss, but they can increase the likelihood of a peril operating. ex. Wet floors(someone could slip and fall), flammable debris piled near the furnace in the basement will provide ready fuel should a spark escape, poorly maintained heating and air conditioning systems, use of damaged extension cords and overfusing are hazardous conditions and are more likely to result in a fire.
Term Give examples of personal risks to which individuals are exposed to.	Definition Personal risks are based on the loss of life or loss of income arising from premature death, physical disability, old age or unemployment. ex. If you become injured or ill and could not work for an extended period of time or ever again how would you surive? ex. If you die prematurely as a result of an accident how would your family survive. ex. if you lost your job
Term Give examples of personal risks to which individuals are exposed to.	Definition Personal risks are based on the loss of life or loss of income arising from premature death, physical disability, old age or unemployment. ex. If you become injured or ill and could not work for an extended period of time or ever again how would you surive? ex. If you die prematurely as a result of an accident how would your family survive. ex. if you lost your job
Term Give examples of property risks to which individuals are exposed to.	Definition These risks arise from property we own. ex. clothes, stereo, car
Term Give examples of liability risks to which individuals are exposed to.	Definition These risks arise out of our obligation to other people. ex. If we inadvertently cause injury to others or damage to their property we can be held responsible. ex. if we own or occupy a premise we are responsible to keep them safe. ex. If our children or pets cause damage to someones property we could be held responsible.
Term Give examples of personal risks to which businesses are exposed to.	Definition Personal risks for businesses arise of of being unable to manage the business. ex. Loss of life or injury to a business owner will prevent them from overseeing their business. Also the risk of not being able to fulfill the role as a business shareholder. ex. Loss causing death, disability, or sickness to one of the shareholders can leave them unable to contribute in their role. The other shareholders will be forced to continue without them, and the business will suffer.
Term Give examples of property risks to which businesses are exposed to.	Definition Risk of a peril damaging business property. Ex. Businesses are subject to many perils. Property damaged must be restored or repaired, which could be financially devastating. Risk of not paying bills. Ex. If an incident causes a business interruption and there is no income, bills will not be paid. Things like heat, water, electricity, mortgage and taxes still need to be paid even the business is not operating.
Term Give examples of property risks to which businesses are exposed to.	Definition Risk of a peril damaging business property. Ex. Businesses are subject to many perils. Property damaged must be restored or repaired, which could be financially devastating. Risk of not paying bills. Ex. If an incident causes a business interruption and there is no income, bills will not be paid. Things like heat, water, electricity, mortgage and taxes still need to be paid even the business is not operating.
Term Give examples of liability risks to which businesses are exposed to.	Definition Risk of occupancy of premises. Ex. If a customer experiences personal injury at the business site, it could prove costly if he or she decides to sue. Risk of products manufactured. ex. If products cause personal injury to customers, it could prove costly to the business. Risk of employee injury. ex. Employees could be hurt while operating on the job.
Term Define Speculative Risk	Definition Speculative risk exists where there is either a chance of loss or a chance of profit. There are two possible outcomes:gain or loss. Such risks are not insurable. ex. A wager on a throw of dice or any other form of gambling could have a good or bad outcome. ex. A student does not study has the possibility of failing the exam as well as passing
Term Define pure risk	Definition Pure risk entails the chance of loss but no chance of profit. There are two possible outcomes, we may suffer a loss or there is no change in our existing condition. ex. If we leave our cars unlocked we may return to find them as we left them or we may not.
Term Define Risk management	Definition The minimization (at a minimum cost) of the detrimental effects of risk by identifying the risk, measuring the risk and controlling the risk.
Term Define insurance	Definition Insurance is the undertaking by on person to indemnify another person against loss, or liability for loss with respect to risk, peril to which the object o the insurance may be exposed or to pay a sum of money or other thing of value upon the happening of a certain event.
Term How does insurance provide security?	Definition .by indemnifying loss .insureds do not have to worry about facing financial hardship .insured will only suffer a minor inconvenience and mental aggravation following a loss

More definations

Terms	Definitions
Which is the correct definition of Peril? a)Is an event that gives rise to a loss b)Is a factor which may increase the likelihood of the loss c)a & b	a) Peril is an event that gives rise to a loss
Slippery Floors Flammable Debris are examples of  a)Risk b)Hazard c)Peril	b) Hazard
Which are the 2 types of Risk?Explain in detail	Risk is classified into Speculative Risk and Pure Risk Speculative risk exist where there is a chance of loss or a chance of profit  Pure Risk entails a chance of loss but no chance of profit
Define Risk?	Is the Chance of Loss
Legal obiligation to other falls under which type of risk a) Personal b)Property c)Liability	c) Liability
Give to examples for each of the following types of risk to which business are exposed: a)Personal b)Property c) Liability	a)Personal-Sole owner of the business serious Injury or sudden death  b) Property-Equipment c)Liability-Safety of employees
Define Risk management?	Risk management is the minimization of the detrimental effects of risk by identifying the risk, measuring the risk & Controlling the risk
Risk can be identified by  a)Site Inspection b)Financial Analysis c)Historical Records d)Employee Interview e)All of the above	e)All of the above
What are 3 ways of controlling Risk?	Risk can be controlled in three ways Reduce or eliminate it by prevetive effort Assume or retain it in other words self-insure Transfer
How is risk measured?	Risk can be measured by determining the likelihood of each identified peril its frequency & severity of loss
Define Insurance?	Insurance is the method of sharing the losses of the few individuals in a group who suffer them among the many members of that group who do not.
Name three general types of Risk and give two examples for each?	Three general types of risk  Personal examples-Premature Death,Physical disability Property examples- Clothes, Sports Equipment Liability risk examples- Injury to others, Damages the property of others
Define reserves?	Reserves are funds required by law to be set aside to pay for losses reported but not yet paid or not yet reported and to cover unearned premiums
What is the definition for Unearned premiums?	Unearned premiums consist of that portion of the premium that has not yet been earned on a given policy.
Insurance is peace of mind.True or False?Explain why?	True,Insurance provides security by indemnifying loss. Insurance provides security because insureds do not have to worry about facing financial hardship. Insurance provides security by allowing insureds to make monthly premium payments
Very large corporations may set up their own insurance company offshore to deal with their risks and put them in a better tax position What are such companies called?	Captive Insurance
What is main objective of Insurance?	Basic objective of insurance is to spread the losses of a small number of individuals over a greater population. In this way insurance becomes affordable to all.
To indemnify means to  a)put back in the same financial position as just prior to the loss. b)put aside funds to pay for the losses c)transfer risk to someone who has better financial resources and can withstand loss.	a)put back in the same financial position as just prior to the loss.
Differentiate between risk & chance?	Chance tends to have positive outcome in a given situation where as risk has a negative outcome
What is the role of Risk Manager?	To manage risk which can be done by the following steps.-Identify risk by doing regular inspection.-Measuring risk.-Control risk by preventive efforts,assuming or retaining it, have funds setup or self insuring,Transferring it to insurance companies.