© prentice hall, 2005excellence in business, revised edition component b - 1 risk management and...
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© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 1
Risk Management and Risk Management and InsuranceInsurance
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 2
Protection Against RiskProtection Against Risk
• Fire
• Lawsuits
• Accidents
• Natural disasters
• Theft
• Illness
• Disability
• Death
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 3
Understanding RiskUnderstanding Risk
• Speculative
• Pure
• Insurable
• Uninsurable
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 4
Insurable Risk CriteriaInsurable Risk Criteria
• Accidental
• Beyond the insured’s control
• Financially measurable
• Large number of similar cases
• Spans a wide geographical area
• Financially serious loss
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 5
Risk ManagementRisk Management
• Assessing risk
• Controlling risk
• Financing risk
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 6
Assessing RiskAssessing Risk
• Loss of property
• Loss of income
• Legal liability
• Loss of services
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 7
Controlling RiskControlling Risk
• Risk avoidance
• Loss prevention
• Loss reduction
• Risk-control transfer
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 8
Shifting Risk to an Shifting Risk to an Insurance CompanyInsurance Company
• Property insurance
• Consequential loss
• Liability insurance
• Key-person insurance
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 9
Property InsuranceProperty Insurance
• Replacement cost
• Actual cash value
• Functional replacement cost
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 10
Consequential Loss Consequential Loss InsuranceInsurance
• Business interruption
• Extra-expense
• Contingent business interruption
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 11
Liability InsuranceLiability Insurance
• Legal damages
• Legal defense
• Loss prevention
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 12
Types of Liability PoliciesTypes of Liability Policies
• Commercial general
• Product
• Automobile
• Professional
• Employment practices
• Excess liability
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 13
Key-Person InsuranceKey-Person Insurance
• Illness
• Disability
• Death
• Retirement
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 14
Self-InsuranceSelf-Insurance
• Predict potential losses
• Make adequate financial arrangements
• Obtain stop-loss insurance
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 15
Monitoring Risk Monitoring Risk ManagementManagement
• What does the company have?
• What can go wrong?
• What do we need to stay in business?
• What’s the best way to protect assets?
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 16
Employee InsuranceEmployee Insurance
• Health insurance
• Disability income
• Worker’s compensation
• Life insurance
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 17
Health insuranceHealth insurance
• Basic medical
• Major medical
• Disability income
• Medicare supplement
• Long-term care
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 18
Rising Cost of Medical Rising Cost of Medical CareCare
• Drugs
• Hospitals
• Lawyers
• Consumers
• State mandates
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 19
Cost Containment Cost Containment MeasuresMeasures
• Preferred-provider organization (PPO)
• Health-maintenance organization (HMO)
• National health insurance
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 20
Disability InsuranceDisability Insurance
• Partial or total
• Temporary or permanent
• Short-term or long-term
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 21
Worker’s CompensationWorker’s Compensation
• Loss of income
• Medical expenses
• Rehabilitation
• Death benefits
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Component B - 22
Life InsuranceLife Insurance
• Credit life
• Term life
• Whole life
• Variable life
• Universal life
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