CHAPTER 1
ATTITUDINAL HAZARD (MORALE): Carelessness to a loss
CHANCE OF LOSS: Probability that an event will occur
DIRECT LOSS: Financial loss from physical damage, destruction, or theft
DIVERSIFIABLE RISK: Affects individual or small groups (can be reduced or eliminated)
ENTERPRISE RISK: All major risks faced by business firms
STRATEGIC RISK: Uncertainty regarding firm's financial goals
OPERATIONAL RISK: Firm's operation results
FINANCIAL RISK: Uncertainty of loss due to adverse changes
ENTERPRISE MANAGEMENT RISK: Single program all major risks faced by business firms (PSSOF)
HAZARD: Condition that increases the chance of loss
HEDGING: transferring risk to a speculator
INCORPORATION: Business firm transfers risk to creditors
LEGAL HAZARD: Characteristics of legal system that increases frequency of loss
LIABILITY RISKS: Possibility of being held legally liable for someone else (no max limit)
LOSS EXPOSURE: Any situation where a loss is possible, whether a loss occurs or not
LOSS PREVENTION: Activities to reduce frequency of loss
MORAL HAZARD: Dishonesty in an individual that increases frequency of loss
NONDIVERSIFIABLE RISK: Affects entire economy or large groups (can't be reduced or eliminated)
NONINSURANCE TRANSFERS: Transfer risk to another party
OBJECTIVE PROBABILITY: infinite observations and no change in underlying condition
OBJECTIVE RISK: Relative variation of actual loss from expected loss
PERIL: Cause of the loss
PERSONAL RISK: Risk that directly affect individual or family
PHYSICAL HAZARD: Physical condition that increases frequency of loss
PROPERTY RISK: Property losses from destruction or theft
PURE RISK: Situation where a possibility of loss or no loss (personal, property, liability)
RETENTION: Individual or business firm retains part or all losses
RISK: Uncertainty of occurrence of a loss
RISK CONTROL: techniques that