Risk Management

TimTim
Mind Map by TimTim, updated more than 1 year ago
TimTim
Created by TimTim over 4 years ago
60
0

Description

Identifying risks, dealing with risks, uninsurable risks
Tags

Resource summary

Risk Management
1 Overview
1.1 Possibility of incurring a loss
1.2 Long-term effect vs short-term inconvenient
1.3 Individual vs Business
1.4 Insurable vs Uninsurable
1.5 Careful planning may reduce the change of occurrence or reduce its impact
2 Types
2.1 Economic
2.1.1 Result in financial loss
2.1.2 Categories
2.1.2.1 Personal
2.1.2.1.1 Health, personal well-being
2.1.2.2 Property
2.1.2.2.1 Loss of personal or business property
2.1.2.3 Liability
2.1.2.3.1 Harm or injury to other people or their property because of your actions
2.2 Non-economic
2.2.1 Result in inconvenience
2.2.2 Examples
2.2.2.1 Late for school
2.2.2.1.1 Embarrassed but no economic impact
2.2.2.2 Late for work
2.2.2.2.1 May result in penalty or loss of job, economic risk
2.3 Pure
2.3.1 loss only, no opportunity for gain
2.3.2 Severe weather such as typhoon may result in business close down and will reduce sales
2.4 Speculative
2.4.1 Either gain or loss
2.4.2 Examples
2.4.2.1 Investment in business
2.4.2.2 Invest in Option or Future
2.5 Controllable
2.5.1 Can be reduced or eliminated by actions
2.5.1.1 Prevent loss from theft by installing a security system
2.5.1.2 Install a tracking device on gas-tank truck to reduce the chance of loss because gasoline gets stolen
2.6 Uncontrollable
2.6.1 Cannot be reduced by actions
2.6.1.1 Century storm is unpredictable and little can be done to reduce the lost
2.7 Insurable
2.7.1 Exchanges the uncertainty of a possible large financial loss for a certain smaller payment
2.7.1.1 Losses are predictable and a large number of people face similar risk
2.7.1.2 Insurance
2.7.1.2.1 Provide financial protection
2.7.1.2.2 Losses usually are more than financial
2.7.1.2.2.1 Recovery rather than financial interest
2.7.1.2.2.2 Need quantification to claim
2.7.1.2.3 Basics
2.7.1.2.3.1 Insured person or business
2.7.1.2.3.2 Insurer (policy owner) who take on certain economic risks and to pay for losses if they occur
2.7.1.2.3.3 Insurable interest, i.e. the right for the policy owner to buy insurance for the insured
2.7.1.2.3.4 Insurability, i.e. the quality of the insured
2.7.1.2.3.5 Policy holder, i.e. the person or company buying the policy
2.7.1.2.3.6 Insurance policy, i.e. the document which states the condition
2.7.1.2.3.7 Premium, i.e. amount to pay for the coverage
2.7.1.2.3.8 Claim, i.e. request for payment for a loss
2.7.1.2.3.9 Beneficiary, i.e. who gets the business from the policy
2.7.1.3 Insurable items for business
2.7.1.3.1 Personnel
2.7.1.3.1.1 Keyman
2.7.1.3.1.1.1 Life insurance
2.7.1.3.1.2 Employee
2.7.1.3.1.2.1 Health insurance
2.7.1.3.1.2.2 Disability insurance for worker's compensation
2.7.1.3.2 Property (assets)
2.7.1.3.2.1 Commercial property insurance
2.7.1.3.2.2 Vehicle insurance
2.7.1.3.3 Operation
2.7.1.3.3.1 Business interruption insurance
2.7.1.3.3.2 Third party liability insurance
2.7.1.4 Insurance for Construction Project
2.7.1.4.1 Performance bond, demand bond, tender bond
2.7.1.4.2 Contractor All Risk Insurance, Employee Compensation Insurance
2.7.1.4.3 Levies
2.8 Uninsurable
2.8.1 Not common or impossible to predict the amount of loss
2.8.1.1 Circumstances
2.8.1.1.1 Economic conditions
2.8.1.1.1.1 Downturn in the economy
2.8.1.1.1.1.1 Monitor economic changes
2.8.1.1.2 Consumer demand
2.8.1.1.2.1 Understand consumer behavior
2.8.1.1.3 Competitors' actions
2.8.1.1.3.1 Marketing
2.8.1.1.3.2 Pricing
2.8.1.1.3.3 Promotion
2.8.1.1.4 Technology changes
2.8.1.1.5 Local factors
2.8.1.1.5.1 Geographical facilities
2.8.1.1.5.2 Political community
2.8.1.1.5.3 Laws
2.8.1.1.5.4 Regulations
2.8.1.1.5.5 Taxes
2.8.1.1.5.6 Infrastructure of a local community
2.8.1.1.6 Business operations
2.8.1.1.6.1 High cost
2.8.1.1.6.2 Low morale
2.8.1.1.6.3 Poor customer image
2.8.1.1.6.3.1 Maintain corporate image
2.8.1.1.6.4 Lack of training
2.8.1.1.6.4.1 Staff development and promotion
2.8.1.1.6.5 Poor management
2.8.1.1.6.6 Poor equipment maintenance
2.8.1.1.6.6.1 Regular maintenance and inspection
2.8.1.1.6.7 Accidents and injuries
3 Ways to dealing with risks
3.1 Avoid
3.1.1 Experience
3.1.2 Planning
3.1.3 Decision based on likelihood of risk or the amount of loss
3.2 Transfer
3.2.1 When risk is too great to assume but cannot be avoided
3.2.2 Examples
3.2.2.1 Credit transfer to bank or credit card company
3.2.2.2 Distribute products through resellers
3.2.2.3 Partner with experienced research institution through joint venture for research or project development
3.3 Insure
3.3.1 Same type of risk also faced by others
3.3.2 Reasonable or limited losses
3.3.3 Statistically predictable occurrence
3.3.4 Pay a small amount for insurance that will cover the losses of the business
3.3.4.1 Fire
3.3.4.2 Shipping
3.3.4.3 Public Liability
3.4 Assume
3.4.1 Risks that are taken by the company
3.4.1.1 Usually measurable and the extend is not serious
Show full summary Hide full summary

Similar

Insurance (1)
Daniel Freedman
Insurance (2)
Daniel Freedman
Insurance
b_serong
Risk Management Vocabulary
Shannon Anderson-Rush
T017 Insurance
tsn_07
Basic Insurance Concepts & Principles - exampdfs 01
shuiziliu
Basic Insurance Concepts & Principles (Fourth Edition - 2013) from SCI website
shuiziliu
Basic Insurance Concepts & Principles - exampdfs 02
shuiziliu
Risk management
Amer Zavlan
Basic Insurance Concepts & Principles - exampdfs 02
raralog106
Basic Insurance Concepts & Principles - exampdfs 01
raralog106