1 / 16

Objective 5.02

Objective 5.02. Understand risk management and insurance. Types of Risk. Types of Risk. What is risk? The possibility of incurring a loss. What is risk management? It is a systematic process of managing risk to achieve set objectives. Different types of risk: Economic and non-economic

sevita
Télécharger la présentation

Objective 5.02

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Objective 5.02 Understand risk management and insurance.

  2. Types of Risk

  3. Types of Risk • What is risk? • The possibility of incurring a loss. • What is risk management? • Itis a systematic process of managing risk to achieve set objectives. • Different types of risk: • Economic and non-economic • Pure risk and speculative • Controllable risk and uncontrollable • Insurable risk and uninsurable

  4. Types of Risk • Economic • Results in financial loss. • Three categories of economic loss: • Personal risk – Result in personal losses • Property risk – Loss of personal or business property including money, buildings and vehicles. • Liability risk – Harm or injury to other people or their property because of your actions. • Example: Fred’s Diner incurred a loss due to a fire.

  5. Types of Risk • Non-economic • May result in embarrassment or inconvenience without financial impact. • Example: Requesting for customers to move to another check-out lane due to a computer problem. • Pure • Threat of a loss without an opportunity for gain. • Example: Frost damages a strawberry patch.

  6. Types of Risk • Speculative Risk • Offers the chance of gain or loss. • Example: Mary opened a shoe store that operated for only six months. • Controllable Risk • Occurs when conditions can be controlled to lessen the chance of harm. • Example: Lumber company automates much of their sawing process to remove the risk of accidents.

  7. Types of Risk • Uncontrollable Risk • Cannot be controlled or reduced by your actions. • Example: Riding along a highway with other speeding automobiles. • Insurable Risk • Meets criteria of an insurance company for coverage. • Example: An artist purchased insurance to cover his collection.

  8. Types of Risk • Unpredictable amount of loss • Example: A competitor of Staples, an office supply store, moved right across the street.

  9. Ways to handle risks

  10. Ways to Handle Risks • Avoid • Transfer • Insure • Assume

  11. Ways to Handle Risks • Avoid the risk • Declining to engage in particular activities. • Example: A book company decline an order to produce 6000 books in one day. • Transfer the risk • Allowing someone else to assume the risk. • Example: A book company has a contract for a trucking company to transport its books.

  12. Ways to Handle Risks • Insure the risk • Purchasing insurance to cover risk. • Example: General Electric sells insurance to customers to cover their appliances. • Assume risk • Finishing an activity andaccepting full responsibility.

  13. Business Insurance

  14. Business Insurable Risks • Personnel • Health insurance provides protection against the high costs of individual health care. • Disability insurance provides payments to employees who are unable to work for an extended period due to serious illness or injury. • Life insurance pays the amount of the insurance policy upon the death of the insured.

  15. Business Insurable Risks • Property • Insurance is purchased to protect businessfrom financial loss due unsuspectingly damages to their buildings, equipment, and building contents, including inventory. • Business Operations • Coverage as a result of accidents, injuries, and property damage.

  16. Types of Uninsurable Risks • Economic Conditions • Consumer Demand • Action of Competitors • Technology Changes • Local Factors • Business Operations

More Related