保险学Teisch12eCh05.pptVIP

Risk Management Techniques: Noninsurance MethodsChapter 5 Chapter Objectives Give examples of the use of risk avoidance and explain when it is an appropriate risk management technique Differentiate between frequency reduction and severity reduction and give examples of each Explain three different forms of loss control, differentiated on the basis of timing issues, and provide examples of each List several potential costs and benefits associated with loss control measures List four forms of funded risk retention Explain the essential elements of self insurance and describe the financial as well as nonfinancial factors that affect a firm’s ability to engage in funded risk retention Describe the nature of risk transfer as a risk management tool and list five forms of risk transfer Explain how risk management adds value to a corporation Risk Avoidance A conscious decision not to expose oneself or one’s firm to a particular risk Can be said to decrease one’s chance of loss to zero A doctor may decide to leave the practice of medicine rather than contend with the risk of malpractice liability losses Risk avoidance is common Particularly among those with a strong aversion to risk However, avoidance is not always feasible Or may not even be desirable if it is possible When risk is avoided, the potential benefits, as well as costs, are given up Loss Control When particular risks cannot be avoided Actions may often be taken to reduce the losses associated with them Known as loss control The firm or individual is still engaging in operations that give rise to particular risks Involves making conscious decisions regarding the manner in which those activities will be conducted Focus of Loss Control Some loss control measures are designed primarily to reduce loss frequency Called frequency reduction Some firms spend considerable funds in an effort to reduce the frequency of injuries to its workers Useful to consider the classic domino theory originally stated