risk and insurance. risk the chance of loss –speculative risk –pure risk
TRANSCRIPT
![Page 1: RISK AND INSURANCE. RISK The chance of loss –Speculative Risk –Pure Risk](https://reader035.vdocuments.us/reader035/viewer/2022072014/56649eb45503460f94bbb9d1/html5/thumbnails/1.jpg)
RISK AND INSURANCE
![Page 2: RISK AND INSURANCE. RISK The chance of loss –Speculative Risk –Pure Risk](https://reader035.vdocuments.us/reader035/viewer/2022072014/56649eb45503460f94bbb9d1/html5/thumbnails/2.jpg)
RISK
• The chance of loss–Speculative Risk
–Pure Risk
![Page 3: RISK AND INSURANCE. RISK The chance of loss –Speculative Risk –Pure Risk](https://reader035.vdocuments.us/reader035/viewer/2022072014/56649eb45503460f94bbb9d1/html5/thumbnails/3.jpg)
Speculative Risk
• A situation that many cause loss or gain.– Investing time, equipment, money, and
human resources to produce a new product– Investing in the stock market or real estate– Spending two or four years of your life,
labor, and money to earn a college degree
![Page 4: RISK AND INSURANCE. RISK The chance of loss –Speculative Risk –Pure Risk](https://reader035.vdocuments.us/reader035/viewer/2022072014/56649eb45503460f94bbb9d1/html5/thumbnails/4.jpg)
Pure Risk
• A situation that can only become a loss.– Destruction of physical property by natural
disaster, riot, fire, or vandalism– Injuries suffered in an automobile accident– Court awards of damages to customers
injured while shopping at a store or to consumers harmed by a product makes
![Page 5: RISK AND INSURANCE. RISK The chance of loss –Speculative Risk –Pure Risk](https://reader035.vdocuments.us/reader035/viewer/2022072014/56649eb45503460f94bbb9d1/html5/thumbnails/5.jpg)
How Businesses Deal with Pure risk?
• Employ a risk manager– Recommend anything of the antirisk
actions• Risk Reduction• Transfer of Risk to a Noninsurer• Assumption of Risk by Self - Insurance• Transfer of Risk to an Insurance
Company
![Page 6: RISK AND INSURANCE. RISK The chance of loss –Speculative Risk –Pure Risk](https://reader035.vdocuments.us/reader035/viewer/2022072014/56649eb45503460f94bbb9d1/html5/thumbnails/6.jpg)
Risk Reduction
• Example– Using flame-retardant or fireproof building
material– Storing inventory in several warehouse at
different locations to minimize potential loss from fire or natural disasters
– Conducting safety programs that teach workers to use machinery properly
– Installing drop safes in retail stores and service stations
![Page 7: RISK AND INSURANCE. RISK The chance of loss –Speculative Risk –Pure Risk](https://reader035.vdocuments.us/reader035/viewer/2022072014/56649eb45503460f94bbb9d1/html5/thumbnails/7.jpg)
Transfer of Risk to a Noninsurer
• Leasing vehicles
• Leasing building
![Page 8: RISK AND INSURANCE. RISK The chance of loss –Speculative Risk –Pure Risk](https://reader035.vdocuments.us/reader035/viewer/2022072014/56649eb45503460f94bbb9d1/html5/thumbnails/8.jpg)
Assumption of Risk by Self - Insurance
• A special fund of cash and marketable securities used to pay for losses caused by natural disasters such as fire, flood, and earthquake
![Page 9: RISK AND INSURANCE. RISK The chance of loss –Speculative Risk –Pure Risk](https://reader035.vdocuments.us/reader035/viewer/2022072014/56649eb45503460f94bbb9d1/html5/thumbnails/9.jpg)
Transfer of Risk to an Insurance Company
• Based on – Law of large numbers– Law of averages
• Insurance policy– a legal contract that transfers risk from
one party to another for a fee called a premium
![Page 10: RISK AND INSURANCE. RISK The chance of loss –Speculative Risk –Pure Risk](https://reader035.vdocuments.us/reader035/viewer/2022072014/56649eb45503460f94bbb9d1/html5/thumbnails/10.jpg)
What Insurance Does a Company Need?
• Fire Insurance – allied lines– Business interruption insurance
• Motor Vehicle Insurance– Collision and upset– Property damage liability– Bodily injury liability– Medical payment
![Page 11: RISK AND INSURANCE. RISK The chance of loss –Speculative Risk –Pure Risk](https://reader035.vdocuments.us/reader035/viewer/2022072014/56649eb45503460f94bbb9d1/html5/thumbnails/11.jpg)
• Workers’ Compensation Insurance– Employ’s accident claim rate– Degree of hazard or risk inherent in the job– Size of employer’s payroll
• Public Liability Insurance
• Product Liability Insurance
![Page 12: RISK AND INSURANCE. RISK The chance of loss –Speculative Risk –Pure Risk](https://reader035.vdocuments.us/reader035/viewer/2022072014/56649eb45503460f94bbb9d1/html5/thumbnails/12.jpg)
• Life Insurance– Provide money to pay the deceased's debt
and funeral costs– Pay an income to survivors after the insure
d’s death– Guarantee that a certain amount of money
will be paid to the insured person some time in the future or to a beneficiary after the insures person dies
What Insurance Does a Company Need? (continued)
![Page 13: RISK AND INSURANCE. RISK The chance of loss –Speculative Risk –Pure Risk](https://reader035.vdocuments.us/reader035/viewer/2022072014/56649eb45503460f94bbb9d1/html5/thumbnails/13.jpg)
• Health Insurance (medical expenses)
• Disability Income Insurance
• Transportation Insurance
• Power Plant Insurance
• Credit Insurance
• Hazardous Waste Insurance
What Insurance Does a Company Need? (continued)