25.2 Managing Risk

Organized strategy for controlling financially loss from pure and insurable risks

• Risk Assessment

• Risk Assumption

• Risk Management

When should risk management begin

• After you are married

• After you have children

• After you get a job

• Whenever you have things that you can lose

What do you learn from a risk assessment

• Your risk score

• An understanding of the types of risk you will face and their potential consequences

• The amount of insurance you will need

• The types of insurance you will nee

What is the first question you should ask while doing risk management

• Which insurance to purchase

• The amount of insurance to purchase

• What financial risk do you take daily

• How serious are your risk

Can you be responsible for loss that is not directly your fault

• Yes

• No

What are the steps in Risk Assessments

• Identify risk of loss, Assess seriousness of risks, Handle risks

• Assess seriousness of risks, identify risk, handle risk

• Avoid loss, identify risk, handle risks

What are the techniques for handling risks

• shifting, avoiding, reducing or assuming

• ignoring, pressing, reducing, shifting

• assuming, shifting, fixing

• avoiding, shifting, fixing

A good risk management plan

• Uses a combination of techniques

• Using one strong techniques

• Tries one technique at a time until the risk is managed

Risk shifting or transfer occurs when

• You blame someone else

• You purchase insurance to cover possible financial loss

• You shift risk to insurance company by purchasing insurance to cover possible financial loss

What must you do to shift risk to insurance company

• Purchase insurance

• Purchase insurance and continue to pay premiums

• Ask someone to cover your losses