ARM 54: Chapter 1 Vocabulary

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  1. Define: Risk
    Uncertainty about outcomes that can be either negative or positive
  2. Define:  Risk Management
    The process of making and implementing decisions that will minimize the adverse effects of accidental losses on an organization
  3. Define:  Business Risk
    Risk that is inherent to the operations of a particular organization, including the possibility of loss, no loss or gain
  4. Define:  Hazard Risk
    Risk from accidental loss, including the possibility of loss and no loss.
  5. Define:  Loss Exposure
    Any condition that presents a possibility of loss, whether or not an actual loss occurs.
  6. Define:  Enterprise Risk Management
    An approach to managing all of an organization's key business risks & opportunities with the intent of maximizing shareholder value.
  7. Define:  Cost of Risk
    The total cost incurred by an organization because of the possibility of accidental loss
  8. Define:  Risk Management Program
    A system for planning, organizing, leading and controlling the resources and activities that an organization needs to protect itself from the adverse effects of accidental loss.
  9. Define:  Pre-Loss Goals
    Risk Management Goals that should be in place even if no significant losses occur. (Such as Economy of Ops, Tolerable Uncertainty (reduced deterrence effects), Legaility, Social Responsibility.)
  10. Define:  Post-Loss Goals
    Risk Management Goals that should be in place in the event of a significant loss (such as: Survival, Continuity of ops, Profitability, Earnings Stability, Social Responsibility, Growth.)
  11. Define:  Risk Management Policy Statement
    A tool for communicating the goals of the risk management program and the roles that people thoroughout the organization have in achieving the organization's risk management goals.
  12. Define:  Results Standard
    Standards that focus on achievements regardless of the efforts they require.( measured in dollars, percentages, ratios or number of losses or claims.)
  13. Define:  Activity Standards
     Standards that focus on activity undertaken to achieve a particular result regardless of the success of that activity. (such as number of calls fieled, site visits, classes taught, etc.)
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ARM 54: Chapter 1 Vocabulary
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