Risk management chapter 5

  1. The objectives or goals of risk control options.(3)
    • 1.reduce the frequency of the loss
    • 2. Reduce the severity of the loss
    • 3. improve the predictability of losses
  2. Reactive avoidance
    stop engaging in the activity causing the loss
  3. Proactive avoidance
    Never to engage in the activity causing the loss
  4. What are problems with the use of avoidance as a rm strategy?(4)
    • 1.usually has an opportunity cost
    • 2. avoiding one loss exposure may create another one that didn't previously exist
    • 3.Avoidance cannot be used for all loss exposures
    • 4. may have a legacy cost associated with it (losses from past activities)
  5. legacy cost
    losses from past activities
  6. loss prevention
    • attempts to decrease the freq. or prob. of the loss¬†
    • does not completely eliminate it
  7. heinrich's domino theory
    Interrupt or break the chain of events that take place prior to a loss.
  8. loss reduction
    something done before or after a loss to reduce severity
  9. fm global
    you know who they are
  10. examples of post loss loss reduction activities
    rehabilitation programs and product recalls
  11. examples of pre loss loss reduction activities
    sprinkler system
  12. separation of exposure units vs duplication of exposure units?
    duplication holds the units in reserve, while separation can make use of the exposure units.
  13. loss prevention
    risk control technique that reduces the frequency of  particular loss.
  14. diversification
    A risk control technique that spreads loss exposures over numerous products, markets or regions.
  15. life safety
    The portion of fire safety that focuses on the minimum building design , construction, operation, and maintenance requirements necessary to assure occupants of a safe exit from the burning portion of the building.
  16. What is an example of avoidance being a feasible option?
    Obgyn not delivering babies
  17. Loss control
    • goal is to reduce frequency or severity of
    • losses or make losses more predictable
Card Set
Risk management chapter 5
Risk management chapter 5