Fundamentals of Risk and Insurance
Fundamentals of Risk and Insurance
Chapter 1 The problem of risk 1. The concept of risk Risk: a condition in which there is a possibility of an adverse deviation from a desired outcome that is expected or hoped for
Chapter 1 The Problem of Risk 1. The concept of risk Risk: a condition in which there is a possibility of an adverse deviation from a desired outcome that is expected or hoped for
Peril: a cause of a loss Hazard: a condition that may create or increase the chance of a loss arising from a given peril Three categories of hazards: Physical hazards Moral hazard Morale hazard
Peril: a cause of a loss Hazard: a condition that may create or increase the chance of a loss arising from a given peril Three categories of hazards: Physical hazards Moral hazard Morale hazard
2 Classifications of risk Pure risk and speculative risk Pure risk: the situations that involve only the chance of loss or no loss Speculative risk: a situation in which there is a possibility of loss but also a possibility of gain
2. Classifications of risk Pure risk and speculative risk Pure risk: the situations that involve only the chance of loss or no loss Speculative risk: a situation in which there is a possibility of loss, but also a possibility of gain
Chapter 2 Introduction to risk management 1. Risk management Risk management is a scientific approach to dealing with pure risks by anticipating possible accidental losses and designing and implementing procedures that minimize the occurrence of loss or the financial impact of the losses that do occur
Chapter 2 Introduction to risk management 1. Risk management Risk management is a scientific approach to dealing with pure risks by anticipating possible accidental losses and designing and implementing procedures that minimize the occurrence of loss or the financial impact of the losses that do occur