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UNIT_1_Risk_in_our_Soiety_Students_Notes

# UNIT_1_Risk_in_our_Soiety_Students_Notes - UNIVERSITY OF...

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UNIVERSITY OF TECHNOLOGY, JAMAICA FACULTY OF BUSINESS AND MANAGEMENT SCHOOL OF BUSINESS ADMINISTRATION INSURANCE UNIT 1-RISK IN OUR SOCIETY * OBJECTIVES 1) Explain the meaning of risk. 2) Explain the term chance of loss. 3) Distinguish between perils and hazards. 4) Distinguish between the three major types of risk: pure risk, speculative risk, and enterprise risk. 5) Identify the three major categories of pure risks that are associated with financial insecurity. 6) Explain the three ways how risk is a burden to society. 7) Explain five methods of handling risk. Meaning of Risk * Risk : Uncertainty concerning the occurrence of a loss * Objective Risk vs. Subjective Risk * Objective risk is defined as the relative variation of actual loss from expected loss * It can be statistically calculated using a measure of dispersion, such as the standard deviation * Subjective risk is defined as uncertainty based on a person’s mental condition or state of mind * Two persons in the same situation may have different perceptions of risk * High subjective risk often results in conservative behavior * Chance of Loss * Chance of loss : The probability that an event will occur * Objective Probability vs. Subjective Probability

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UNIT_1_Risk_in_our_Soiety_Students_Notes - UNIVERSITY OF...

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