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FIL 250 Chapter 3
Risk Control
| Question | Answer |
|---|---|
| Risk control | a technique that is aimed at reducing losses of an organization by targeting the frequency or severity of losses or speeding recovery of operations |
| Avoidance | a risk control technique where an organization decides to not engage is an activity which has some type of loss exposure. It eliminates any losses from that activity |
| Loss prevention | A risk control technique aimed at reducing the frequency of loss. An example would be a training program for employees to help reduce the incidence of workplace injury |
| Loss reduction | A risk control technique aimed at reducing the severity of losses that occur. These techniques can be initiated both before the loss (sprinkler system) or post-loss (execute business continuity plan) |
| List six risk control techniques | avoidance, loss prevention, loss reduction, duplication, separation, diversification |
| Separation | A risk control technique that physically divides assets to minimize the impact of a single loss event and to help continue operations. |
| Duplication | a risk control technique that uses backup copies or spares of important property of information. The backup replaces the original in case of loss |
| Diversification | A risk control technique to spread loss exposures across several different products, markets, or locations. |
| What are the four major goals of risk control? | 1. Implement effective and efficient measures (choose techniques that reduce losses and are cheaper) 2. Comply with legal requirements 3. Promote life safety 4. Ensure business continuity |
| Life safety | Based on the occupancy of a building, these are required construction, operation, and maintenance requirements to assure that people have a safe exit in the event of a fire |
| What does the acronym "COPE" stand for? | Used for assessing (and perhaps reducing) property risk, COPE is: Construction Occupancy Protection (internal and external) Environment (neighboring property) |
| What are the six steps to the business continuity process? | 1. identify critical functions 2. identify risks/threats to critical functions 3. evaluate impact to critical functions 4. develop a continuity strategy 5. develop a business continuity plan 6. monitor and revise |
| Which three risk control techniques are most useful for liability exposures? | avoidance, loss prevention, and loss reduction |
| proactive avoidance | before the fact, choosing not to engage in a venture that has risk |
| reactive avoidance | abandonment of risky activities, often after experiencing significant losses |
| engineering approach to risk control | uses elements of design and technology in an effort to minimize losses and hazards (e.g., air bags in cars) |
| human behavior approach to risk control | seeks to understand and modify existing behaviors of people in an effort to reduce losses (e.g., training program) |
| premises liability | liability that occurs at a business's location, such as customers slipping on a floor in a retail store |
| operations liability | liability that arises from the normal activities of a business such as property damage and/or bodily injury (e.g., auto liability by delivery personnel is an example) |
| completed operations liability | liability that arises after work has been completed for customers, such as an improperly installed plumbing fixture that causes property damage |
| products liability | liability that arises due to the defect of distributed goods |
| workers compensation liability | liability that arises from employee injuries while performing their job |
| professional liability | liability incurred by professionals, such as lawyers or accountants, who don't exercise the higher standard of care toward others as required by their occupation |
| management liability | liability incurred by managers and their employers as a result of engaging in wrongful acts that injure shareholders, employees, or others |
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isufil250
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