risk management: financial services

risk

the possibility of loss, damage, or injury

natural risk

a situation caused by acts of nature. this is a controllable risk and insurance can help recover the losses from damage.

economic risk

a situation that occurs when business activities suffer due to changed in the US or world economy. this is hard to predict and is uncontrollable.

market risk

the potential that the target market for new goods or services is much less than originally projected. this is uncontrollable and cannot be insured.

human risk

a negative situation caused by the actions of people. these risks include shoplifting, embezzlement, and using stolen credit card. some are insurable.

risk management

the 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. cannot be minimized by taking certain actions.

pure risk

a risk with a possibility of loss, but not possibility of gain.

speculative risk

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

insurance

a financial service used to protect against loss.

uninsurable risk

one that an insurance company will not cover.