The non-renewal of Lynas’s operating license by the Malaysian government is an example

of Answer loss exposure

4The foremost important pre-loss objective is Answer .

A business entity has three identical manufacturing plants in Penang, Selangor and Johor.
Each plant is valued at RM200 million. The risk manager is concerned about the damage
which could be caused by a single windstorm. The risk manager believes that there is an
extremely low probability that a single windstorm could destroy two or all three plants
because they are located so far apart. The probable maximum loss associated with a single
windstorm is RMAnswer million.

The post-loss objective of Answer is to minimize the effects that a loss will have
on other persons and on society

is the worst loss that is the most likely to happen to a business entity.
The sudden death of a promising chef of a restaurant is an example of Answer
loss exposure.

The first step in risk management process is to Answer potential loss exposures.

A Answer shows the flow of production and delivery, so it can reveal production
and other bottlenecks

Achieving Answer means that the business entity should prepare for potential
losses in the most economical way
A business entity has three identical manufacturing plants in Penang, Selangor and Johor.
Each plant is valued at RM200 million. The risk manager is concerned about the damage
which could be caused by a single windstorm. The risk manager believes that there is an
extremely low probability that a single windstorm could destroy two or all three plants
because they are located so far apart. The maximum possible loss associated with a single
windstorm is RMAnswer million.

Risk analysis questionnaire is a risk Answer tool.

is a process of identifying, analyzing and managing the loss exposures faced by a business
entity with appropriate techniques
refers to potential loss. It is any situation or circumstance in which a loss is possible,
regardless of whether the loss actually occurs
Quiz 2

The retention limit set by the business entity is a Answer limit.

A business entity self-insures its employee benefit loss exposure. It is concerned about the
possible impact of a single catastrophic claim, so it decided to pay a maximum of
RM500,000 per claim and to purchase insurance that will begin to pay once it has paid
RM500,000 on a single claim. The insurance the business entity purchased is called Answer
.

A Answer can write any type of liability coverage except employer’s liability,
workers compensation and personal lines.

Loss Answer is a residual risk management technique. It should be used when

other methods of treatment are not available.

Loss Answer reduces loss frequency to zero and the loss exposure is eliminated.
A credit line can be established with a bank and be used to pay losses. In other words,
a Answer fund is used to pay losses.

is the liquid fund sets aside to pay losses.

insurance will start paying for losses when the loss amount exceeds the retention limit of
the business entity.

A risk retention group is a Answer insurer.

A business entity self-insures its employee benefit loss exposure. It is concerned about the
possible impact of a single catastrophic claim, so it decided to pay a maximum of
RM500,000 per claim and to purchase insurance that will begin to pay once it has paid
RM500,000 on a single claim. The RM500,000 is a Answer limit for the business
entity.

An employer providing self-insured health plan will purchase Answer to pay for the
medical costs above a certain limit.

A business entity which is financially Answer can set a higher level of retention
limit.

Several physicians can form a Answer to insure themselves against the liabilities
of medical malpractices.

A risk retention group is a Answer captive.

is the loss amount the business entity will retain.

A Answer is an insurance company (seller) that sells insurance to another

insurance company (buyer).
insurance will start paying for losses when the loss amount exceeds the amount the
business entity decided to retain.
A self-insured health plan provided by an employer typically is protected by a Answer
limit that caps the employer’s out-of-pocket medical costs when the loss amount
exceeds a certain limit.
In a Answer market, the profitability of insurance industry is declining. Insurance
companies will tighten their underwriting standards. It is difficult to obtain insurance and
premium is expensive. As such, the risk manager may decide to retain more of a given loss
exposure and cut back on the amount of insurance purchased.

In a Answer market, the risk manager may decide to increase the amount of
insurance purchased.
A written document containing some details about the business entity’s risk management
program, its objectives, available techniques, and the responsibilities of the risk manager
and other parties involved in the program is called a Answer .

Risk managers will solicit competitive Answer bids from several insurers to get the
broadest possible coverage and terms at the most cost-effective price.

Earthquake, tsunami and war are examples of Answer risks, so insurance cannot
be used to manage these risks.

A Answer is an amount subtracted from the loss payment otherwise payable to the
policyholder.
A written record stating the business entity’s risk management objectives and philosophy
with respect to the treatment of loss exposures is called a Answer .

In a Answer market, the risk manager may decide to retain more of a given loss
exposure.

In a Answer market, profitability is improving and the insurance industry is doing

well.

In a Answer market, it is easy to obtain insurance and premium is inexpensive.

Burglary, damages caused by fire and road accidents are examples of Answer
risks, so insurance can be used to manage these risks.
covers a wide spectrum. It manages both insurable and non-insurable risks and uses all
techniques to manage risks.

Contributions to funded reserve are not income-tax deductible but Answer are
income-tax deductible. Provide ONE word for the answer.

In a Answer market, insurance companies will loosen their underwriting standards.

In a Answer market, insurance companies will tighten their underwriting standards.

 is the cyclical pattern in underwriting standards, premiums charged and
profitability in insurance industry.

In a Answer market, the risk manager may decide to retain less of a given loss
exposure.

In a Answer market, the risk manager may decide to cut back on the amount of
insurance purchased.
Risk management process involves the entire business entity, so close cooperation
and Answer are essential between the risk management department and other
functional areas of the business entity. Provide TWO words for the answer.

In a Answer market, profitability is declining as the insurance industry is

experiencing underwriting losses.

In a Answer market, it is difficult to obtain insurance and premium is expensive.

covers a narrower scope. It manages insurable risks only and uses insurance as
the main technique to manage risks.

In a Answer market, the profitability of insurance industry is improving. Insurance

companies will loosen their underwriting standards. It is easy to obtain insurance and
premium is inexpensive. As such, the risk manager may decide to retain more of a given
loss exposure and increase the amount of insurance purchased.
An insurance policy specifically written and designed to meet the needs of an insurance
purchaser is called a Answer .