Page 41 - RISK Management IC86 Ebook
P. 41
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n FREQUENCY of its likely occurrence
n PROBABILITY of loss or damage
n SEVERITY of the effects of a loss
n PERCEPTION of the probability of loss and its effects
l CHRONIC LOSSES which are small and regular and which
are almost inevitable. These should be looked upon as a trade
risk. However the annual aggregate total of this type of loss
can often be significant and they therefore should not be
ignored.
l SPORADIC LOSSES which are medium sized and irregular
that may happen sometime and may be able to be controlled
to a significant extent.
l CATASTROPHES which are very large losses which may
occur on rare occasions. Such losses will probably have a
devastating effect on any organisation that they affect.
The Statistical Method
The steps involved in considering loss experience statistics,
may be on the following lines:
a) Review available statistics for -
l the particular operation / company
l the industry
l the country
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