RMI 2302- Final Exam Guide - Comprehensive Notes for the exam ( 49 pages long!)
30 Nov 2017
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Risk in business and society - notes 1. Relative variation of actual from expected loss (variation or standard deviation) Uncertainty is doubt about our ability to predict future outcomes. Uncertainty can differ across individuals even when risk is the same (subjective) Information does not alter risk (objective), but can alter uncertainty. Reduction in uncertainty can be a good thing. Speculative (spec. can go up, down, or stay the same. Pure - you either lose it or don"t lose it) Exposure - person or property facing risk of loss. Peril - the immediate cause of loss. Hazard - condition affecting the frequency or severity of loss. Hazards - conditions affecting perils (frequency or tea or loss) Value of risky situation is expected loss. Risk averse - prefer to avoid risk. Willing to pay more than expected loss to avoid risk. Would pay more than expected return to engage in risky situation. Organizations - entire industry - risk management.
