| A | B |
|---|
| risk | chance of loss |
| 3 classifications of risk | human, economic, natural |
| economic risk | risk due to changes in the market |
| competitors | example of economic risk such as a new product being introduced |
| example of a natural risk | wind storm |
| example of a human risk | someone getting hurt |
| human risks involving customers and employees | incompetence, shoplifting, etc. |
| pure risk | chance for loss or no loss |
| speculative risk | chance for loss, no loss, or gain |
| interest rate increase | when the Fed does this, insurance cannot cover |
| robbery | pure risk example in which someone takes things from you |
| transferrable | property damage risk is this because you can shift it to someone else thru insurance |
| example of how to prevent human risks | well trained employees, good planning |
| retain | if risk is SMALL, or businesses are UNAWARE they may do this with risk |
| transferring | removing or transferring risk to someone else shift risk |
| example of avoiding risk | not having it in a location at all |
| guarantees, bonds or leases | examples of transferring risk |
| credit screening | example of a prevention measure |
| transportation insurance | protection from lost shipments |
| government intervention | economic risk such as businesses complying with laws |
| examples of pure risks | robbery, tornadoes, accidents |
| preventing risk | choosing products carefully, screening credit aps and keeping informed are all ways to do this |
