Market value the value that the next highest valued

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Market Value – the value that the next-highest-valued user would pay for the property Firm-Specific Value – the value of the property to the current owner Replacement Cost New – the cost of replacing the damaged property with new property The frequency of loss measures the number of losses in a given period of time. If historical data exist on a large number of exposures, then the probability of a loss per exposure can be estimated by the number of losses divided by number of exposures.
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The severity of loss measures the magnitude of the consequences of each loss. One way to estimate expected severity is to use the average severity of loss per occurrence during a historical period. Risk Map – graphical representation of frequency and severity 4. Risk treatment options for risk that are acceptable or tolerable: a) taking or increasing risk in order to pursue an opportunity b) removing the risk source c) changing the likelihood d) changing the consequences e) sharing the risk with another party f) retaining the risk by informed decision Major methods of treating risk: (1) risk control a-d (2) risk financing e-f (1) Risk Control involves decisions to invest (or forgo investing) resources to reduce expected losses.
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