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Unformatted text preview: ) Pure risk involves large potential losses relative to the expected loss Firm specific, involves many firms Managed by insurance and derivatives Involves wealth losses to society Involves redistributions to society BUT: use the same frame to manage pure and price risk No clear distinguishing factors (in management) Risk Management Process 1. Identify risks 2. Evaluation frequency and severity 3. Choose methods of management Loss control, Loss Financing, Internal Loss reduction 4. Implementation 5. Monitoring performance Management Methods Loss Control Reduces level of risky activity Increased precautions Loss Financing Retention and self insurance Hedging Internal Risk Reduction Diversification Investments in information...
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- Winter '08
- Management, risk manager, price risk, risk Pure Risk