Page 275 - RISK Management IC 86

 Administration of risk management unit program ; Insurance
accounting (premium allocation, loss statistics, and other record
keeping functions) unit budgeting and management of unit person-
nel (if more than two in the unit).

(Source : The Risk and Insurance Manager Position : A study of
Responsibilities and compensation, conducted for the Risk Man-
agement Society, Inc., (Princeton : Sibson and Company, Inc., January,
1978) P.16

Risk measurement :
Assessment of the impact of possible losses.

Risk prevention :
Any measure designed to reduce the frequency of a given type of loss.

Risk, reaction to :
How we behave in a situation where the future is unknown.

Risk reduction :
Any measure designed to reduce the size of those losses which are
not prevented.

Risk retention :
A risk financing tool under which the source of funds is the firm itself
or borrowings it must repay.

Planned retention : Retention that results from a conscious decision.
Active, not passive retention.

Self insurance : A special case planned retention - not insurance.
Exposures must be numerous enough for the loss exposure to be
fairly predictable.

Risk transfer : Risk transfers could be risk control measures or risk
financing measures. Risk transfers could be risk control measures or
risk financing measures. Risk control transfers (i) shift the property or
activity itself to someone else, (ii) eliminate or reduce the transferor’s
responsibility for losses to the transferee, or (iii) cancel obligations
that the transferor has assumed for losses to others. Through risk
financing transfers, the transferor seeks external funds that will pay
for the losses that do occur. Risk financing transfers could be transfer
of risk to the insurers or non-insurance transfers. Non insurance
transfers differ from insurance in that the transferees (i) are not legally
insurers, and (ii) usually do not accept enough, exposure units for
their losses to be fairly predictable.

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