Page 271 - RISK Management IC 86

Probability moderate : The likelihood of a loss if this loss has
happened once in a while in the past and can be expected to occur
some time in the future.

Loss, expected : The average loss in the long run. The expected loss
is the mean of the probability distribution of losses, not the mode.

Loss, maximum probable yearly aggregate : The larges aggregate
rupee loss that is likely to occur during the year. This aggregate loss
depends upon the number of occurrences per year as well as their
severity.

Probability of Loss, Spatial : The proportion of similar times during
which a unit is exposed to a loss over a given time period that
experience a loss, given a very large number of units exposed.

Probability of loss, temporal: The proportion of similar times during
which a unit is exposed to a loss that the loss will occur, given a very
large number of times exposed.

Variation, coefficient of : The standard deviation divided by the mean
or the expected value. A measure of the dispersion, scattering or
variation of the outcomes in a probability distribution. The larger the
coefficient of variation, the less predictable is the future outcome.

Risk Management :
A management discipline whose goal is to protect the assets and
profits of an organization by reducing the potential for loss before it
occurs, and financing, through insurance and other means, potential
exposures to catastrophic loss such as acts of God, human error or
court judgments. In practice, the process consists of logical steps :
risk or exposure identification ; measurement and evaluation of
exposures identified ; control of those exposures through elimination
and / or reduction ; and financing the remaining exposures so that the
organization, in the event of a major loss, can continue to function
without severe hardship to its financial stability.

Risk management versus management :
Management defined : Management maybe defined as the process of
planning, organising, directing and controlling the resources and
actives of an organisation in order to fulfill the objectives of that
organization at the least possible cost.

Risk Management defined : Risk management may be defined as the
process of planning, organizing , directing and controlling the
resources and activities of an organisation in order to minimize the
adverse effects of accidental losses on that organisation at the least
possible cost.

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