risk management. economic and non-economic risks pure and speculative risks controllable and...
TRANSCRIPT
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Risk Management
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Economic and non-economic risks Pure and speculative risks Controllable and uncontrollable risks Insurable and uninsurable risks
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Economic risk◦ Can result in financial loss
Personal risk◦ Can result in personal losses such as health and
personal well-being Property risk
◦ Can lead to loss of personal or business property including money, vehicles, and buildings
Liability risk◦ Relates to harm or injury to other people or their
property as a result of your actions
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Pure risk is a risk that presents the chance of loss but no opportunity for gain is a pure risk.◦ Weather
Speculative risk offers the chance either to gain or to lose.◦ Investing in a new business, stock market
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A risk that you can reduce or eliminate by your actions is controllable◦ Protecting yourself from theft by adding security
measures
Uncontrollable risks cannot be reduced by your actions.◦ Hailstorm
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Risk is the possibility of incurring a loss.
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Avoid it!
Transfer it.
Insure the risk
Assume the risk Yikes! Gotta go!
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Method Activity
Avoid Choose not to participate in the risky activity.
Transfer Find another business to complete the activity.
Insure Purchases insurance to pay for any losses.
Assume Complete the activity with full responsibility.
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How do individuals and businesses pay for large economic losses?◦ Insurance – planned protection against economic
losses. Provided by insurers or insurance companies Provided on behalf of the insured Risks covered are outlined in an insurance policy The insured is also known as the policyholder The payment for the policy is known as the premium Asking for money when an insured loss occurs is
called filing a claim.
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Personnel
Property
Operations
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Health◦ Protects against high costs of individual health
care
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Disability◦ Provides payments to employees who are not
able to work for an extended period of time due to illness or injury
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Life◦ Beneficiaries
Family Partners Key executives
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Commercial property◦ Buildings◦ Equipment◦ Building contents, including inventory
Protection covers property losses resulting from fire, storms, accidents, theft, and vandalism.
Special policies can also provide coverage for flood damage and earthquakes.
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Autos Trucks Other business vehicles
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Insurance to provide compensation for ongoing business expenses for temporary shutdown due to flood, fire, or other major problem.
Liability insurance provides coverage for claims by others based on damages suffered because of business operations, employees, or products.
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The costs of some risks are so high that a business cannot afford the cost of insurance protection.
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Economic Conditions◦Recession, Depression
Consumer Demand◦Can’t always count on consumer loyalty
Competitors’ Actions◦Better advertising, better product, better service
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Technology Changes◦ If you can’t adapt you can be left behind!
Local Factors◦ Construction in front of the business, new
highway bypasses the town, laws, taxes . . . Business Operations
◦ Bad business practices can cause higher costs, low morale, poor customer image.
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Awareness Continuous study of risk areas
◦ Stay aware of changes in the economy, competitors’ actions, and technology
Collect and review customer information◦ Complaints and requests
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Carry out business in many countries (spread the love)
Offer a range of products (eggs in more than one basket)
Involve local business partners Employ local management
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Exclusive rights to possess and use property and its profits◦ Nobody else can interfere with the use of them.
Intellectual property◦ Technical knowledge or creative work
Software, clothing designs, music, books, and movies Patent
◦ Exclusive right of an inventor to make, sell, and use a product or process. Designed to encourage innovation and progress.
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Trademark◦ A distinctive name, symbol, word, picture, or
combination of these that a company uses to identify products or services.
Copyright◦ Protects the original works of authors, composers,
playwrights, artists, and publishers. Counterfeiting
◦ Refers to illegal uses of intellectual property, patents, trademarks, and copyrights.
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T
The End