Intro to Bus - Chapter 14 - Risk Management

Risk

possibility of loss, damage, or injury.

Natural Risk

situation caused by acts of nature.

Economic Risk

situation that occurs when business activities suffer due to changes in the US or world economy.

Market Risk

potential that the target market for new goods or services is much less than originally projected.

Human Risk

negative situation caused by the actions of people

Risk Management

process of evaluating risk and finding ways to minimize or manage loss.

Controllable Risks

situations that cannot be avoided, but can be minimized by purchasing insurance or creating a risk management plan.

Uncontrollable Risks

situations that cannot be predicted or covered by purchasing insurance.

Pure Risk

Risk with a possibility of loss, but no possibility of gain.

Speculative Risk

risk that can result in either financial gain or financial loss.

Insurance

financial service used to protect against loss.

Uninsurable Risk

risk that an insurance company will not cover.

Insurance Policy

defines the type of losses that are covered, amount of coverage in dollars, and other conditions to which the two parties agree.

Premium

amount the insured pays for insurance coverage.

Claim

process of documenting a loss against an insurance policy.

Deductible

amount the insured is responsible for paying when a claim is made.

General Liability Insurance

protects against financial losses that result from legal issues

Product Liability Insurance

protects against financial losses due to a product defect that may cause injury to the user of the product.

Professional Liability Insurance

protects service-based businesses from financial losses caused by errors and negligence in how a service is provided

Commercial Insurance

protects commerical property from risks, such as fire, theft, and natural disaster.

Liability Insurance

covers financial losses caused by the actions or negligence of a person of business.

Business Interruption Insurance

covers the lost income and related expenses caused by a property damage loss.

Fidelity Bond

covers financial and property losses caused by employee actions.

Directors and officers Insurance

protects a business from financial losses caused by the actions of the company's executive officers.

Data Breach Insurance

covers the legal fees and other financial losses sustained when a company's data files are accessed without permission.

Property Insurance

covers losses and damage to the assets of a business caused by a variety of events, such as floods, fire, smoke, and vandalism.

Worker's Compensation Insurance

covers medical expenses and lost wages for employees who are injured at work.

Unemployment Insurance

provides certain benefits to workers who have lost their jobs through no fault of their own.

Disability Insurance

provides some financial income to employees who become sick or injured due to non work related event or condition.