2. Risk management tools Include two broad approaches: (1) Risk control focuses on minimizing the risk of loss A Risk avoidance B Risk reduction: loss prevention loss control (2) Risk financing focuses on finding funds to meet losses
2. Risk management tools Include two broad approaches: (1) Risk control focuses on minimizing the risk of loss A. Risk avoidance B. Risk reduction: loss prevention & loss control (2) Risk financing focuses on finding funds to meet losses
(2) Risk financing focuses on finding funds to meet losses A Risk retention(assumption) Intentional and unintentional B, Risk transfer Insurance, hedging Assume all risks that are not significant in relation to the company' s financial strength Insure all risks not assumed
(2) Risk financing focuses on finding funds to meet losses A. Risk retention (assumption) Intentional and unintentional B. Risk transfer Insurance, hedging Assume all risks that are not significant in relation to the company’s financial strength Insure all risks not assumed
3. Risk management process (1)Determination of objectives (2)Identification of risks (3 Evaluation of risks (4 Considering alternatives and selecting the risk treatment device (5)Implementing the decision (6) Evaluation and review
3. Risk management process (1) Determination of objectives (2) Identification of risks (3) Evaluation of risks (4) Considering alternatives and selecting the risk treatment device (5) Implementing the decision (6) Evaluation and review
Determination of objectives Post-loss objectives Pre-loss objectives Survival Economy Continuity of operations Reduction in anxiety Earning stability Meeting externally imposed obligations Continued growth Social responsibility lity Social responsibilit
Determination of objectives Post-loss objectives Pre-loss objectives Survival Economy Continuity of operations Reduction in anxiety Earning stability Meeting externally imposed obligations Continued growth Social responsibility Social responsibility
Chapter 3 The insurance device 1 The nature and functions of Insurance (1 Risk sharing and risk transfer A. Transferring or shifting risk from one individual to a group B Sharing losses, on some equitable basis, by all members of the group
Chapter 3 The insurance device 1. The nature and functions of insurance (1) Risk sharing and risk transfer A. Transferring or shifting risk from one individual to a group B. Sharing losses, on some equitable basis, by all members of the group