Shared Flashcard Set

Details

CPCU 500
CPCU 500 - RISK CONTROL - CHAPTER 3
27
Insurance
Professional
10/06/2011

Additional Insurance Flashcards

 


 

Cards

Term
What is Risk Control?
Definition
A conscious act, or decision not to act, that reduces the frequency and/or severity of losses and makes losses more predictable. 
Term
Name two Risk Management Techniques.
Definition
Risk Control or Risk Financing.
Term
Name the six broad Risk Control Techniques
Definition
Avoidance, Loss Prevention, Loss Reduction, Separation,  Duplication, Diversification
Term
What is the Risk Control Technique - Avoidance?
Definition
Ceasing, or never undertaking an activity, so that the possibility of a future loss occurring from that activity is eliminated. (Can be proactive or reactive - is considered when the expected values outweigh the expected benefits.)
Term
What is the difference between Proactive Avoidance and Reactive Avoidance risk control methods?
Definition
Proactive seeks to avoid the risk before it exists (such as choosing not to engage in an activity); Reactive seeks to eliminate a loss exposure that already exists (such as discontinuing an existing activity).  Both methods avoid loss exposures from future activities.   Reactive does not eliminate loss exposures from past activities.
Term
What is the Risk Control Technique - Loss Prevention?
Definition
It reduces the frequency of a particular loss.
Term
What is the Risk Control Technique - Loss Reduction?
Definition
It reduces the severity of a particular loss.
Term
What are two broad categories of Loss Reduction Measures?
Definition
Pre-loss measure (applied before loss occurrs and is aimed to reduce the extent of damages incurred from a single event); Post-loss measure (applied after the loss occurrs and focuses to halt the spread or counter the effects of a loss).
Term
What is the Risk  Control  Technique - Separation?
Definition
It isolates loss exposures from one another to minimize the adverse effect of a single loss. (The intent is to reduce severity of an individual loss at a single location.)
Term
What is the Risk Control Technique - Duplication?
Definition
It uses backups, spares or copies of critical property information, or capabilities, and keeps them in reserve. 
Term
What is Risk Control Technique - Diversification?
Definition
It spreads the loss exposures over numerous projects, products, markets and regions.
Term
Name four Risk Control Techniques that are used to control support Risk Control Goals?
Definition
Implement an Effective and Efficient Risk Control Measure, Comply with Legal Requirements, Promote Life Safety, Ensure Business Continuity.
Term
What is Life Safety?
Definition
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.
Term
Describe the advantages of using a Cash Flow Analysis for the selection of Risk Control measure.
Definition
It helps the organization's value-maximization goal by providing a basis for comparison for all value-maximizing decisions.   It increases efficiency by reducing unnecessary expenditures on risk control.
Term
Describe the disadvantages of using Cash Flow Analysis for the selection of risk control measures.
Definition
Weakness of assumptions that often must be made to conduct the analysis, difficulty in accurately esimating future cash flows, and lack of consideration of nonfinancial goals or slection criteria.  Example, legal and social responsibility goals are not directly considered in cash flow analysis.
Term
List the types of state or federal statutes an organization may need to consider when selecting risk control measures in order to comply with legal requirements.
Definition
Fire safety coes, environmental regulations, workers compensation laws and disability laws.
Term
Identify the possible consequences an organization can face for failure to comply with legal requirements.
Definition
Fines, sanctions, or liability for faulire to comply with legal requirements.
Term
Identify the issues regarding fire, health, and safety a risk management professional should consider when assessing an organization's Life-Safety Exposures.
Definition
Consider the characteristics of the people who occupy a building and the type of building occupancies (commercial, personal use).
Term

Identify causes of loss an organization should consider when promoting Life Safety.

Definition
Fire safety, product safety, building collapse, industrial accidents, environmental pollution, and exposureto hazardous activities that may create the possibility of injury or death.
Term
Identify the factors insurance producers and underwriters commonly consider when examining loss exposures in commercial properties.
Definition
Construction, occupancy, protection, and environment.
Term
What Risk Control Techniques are commonly used to control liability loss exposures?
Definition
Avoidance, Loss Prevention, and Loss Reduction.
Term
Describe Loss Prevention and Loss Reduction measures an organization might use to control work related injury or illness.
Definition

Loss Prevention - Education, Training, and Safety Measures.

Loss Reduction - Emergency Response Training, and Rehabilitation Management.

Term
What is the purpose of Business Continuity Management?
Definition
Identify potential threats and provide method of ensuring continued business operations.  It is designed to meet the organizations post-loss goals of survival and continuing operations.
Term
Identify potential situations that business continuity management might address to help achieve an organization's goal of survival and continuity of operations afer a loss.
Definition
Interruptions from property losses, IT problems, human failures (fraud), loss of utility services or infrastructure, reputation losses, and human asset (personnel) losses.
Term
List the six steps in the Business Continuity Process.
Definition
Identify the organizaton's critial functions, Identify the risks or threats to the organization's critical functions, evaluate the effect of the risks on those critical functions, develop a strategy, develop a plan, monitor and revise.
Term
Identify guidelines for design of an effective Business Continuity Plan.
Definition
Design a clear plan that can be quickly read and understood, provides copies of the plan to all relevant parties, and provide appropriate training.
Term
List the content commonly contained in Business Continuity Plans?
Definition
Strategy the organization will follow to manage crisis, information about the roles and duties of various individuals in the organization, steps that can be taken to prevent any further loss or damage, Emergency response plan to deal with life and safety issues, Crisis management plan to deal with communcation and reputation issues, Business Recovery and Restoration Plan to deal with losses to property, process or products, and Access to Stress Management and Counseling for affected parties.
Supporting users have an ad free experience!