Review Questions

  1. What is the meaning of risk management?

  2. Explain the objectives of risk management both before and after a loss occurs.

  3. Describe the steps in the risk management process.

  4. a.

    1. Identify the sources of information that a risk manager can use to identify loss exposures.

    2. What is the difference between the maximum possible loss and probable maximum loss?

  5. a.

    1. Explain the meaning of risk control.

    2. Explain the following risk-control techniques.

      1. Avoidance

      2. Loss prevention

      3. Loss reduction

      4. Duplication

      5. Separation

      6. Diversification

  6. a.

    1. Explain the meaning of risk financing.

    2. Explain the following risk-financing techniques.

      1. Retention

      2. Noninsurance transfers

      3. Insurance

  7. What conditions should be fulfilled before retention is used in a risk management program? ...

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