INS 3533 - The Concept of Risk

What is the traditional meaning of 'risk'?

• Uncertainty of success

• Guaranteed outcome

• Possibility of harm, injury or loss

• Possibility of profit

What does the Heinrich Triangle explain?

• The relationship between frequency and severity of risk

• The types of insurance policies

• The definition of pure risk

• The concept of speculative risk

Which of the following is an example of insurable loss?

• Loss of a family heirloom

• Damage to a car from an accident

• Loss of a job

• Decline in stock market value

What type of risk can result in loss, no loss, or profit?

• Pure risk

• Speculative risk

• Fundamental risk

• Particular risk

What is a peril in the context of risk?

• The main cause of loss

• A condition that increases the chance of loss

• A type of insurance policy

• A financial investment

Which of the following is NOT a type of hazard?

• Morale hazard

• Economic hazard

• Moral hazard

• Physical hazard

What is a characteristic of insurable risks?

• They must be intentional

• They must involve speculative outcomes

• They must be predictable and measurable

• They must be beneficial to the insurer

Which type of risk affects only individuals and is within their control?

• Speculative risk

• Particular risk

• Fundamental risk

• Pure risk

What is the main focus of risk management in Islam?

• To reduce the risk of loss and calamities

• To ignore fate and rely solely on luck

• To avoid all risks

• To embrace risks for profit

What is the purpose of a risk management plan?

• To outline strategies for mitigating risks

• To ensure maximum profit

• To increase the likelihood of loss

• To avoid all forms of risk