[RMI 2101] - Final Exam Guide - Ultimate 43 pages long Study Guide!

• School: Temple University
• Department: Risk Management and Insurance
• Course: RMI 2101
• Professor: Mccloskey

Document Summary

Uncertainty: events that produce loss - for individual or firm, financial term = money. A loss which is certain has 100% chance; impossible loss has 0% chance happening. 3 future states (1) gain (2) loss (3) neither -(i. e. gambling, investing in stock, buying a house) 2 future states (1) loss (2) no loss - (i. e. fire, flood, death, sickness) Static: does not change significantly over time; always present (i. e. natural disaster, violence, sickness) Dynamic: arise out of changing circumstances; brand new (i. e. cybercrime, terror, drones) Diversifiable: impacts only some individuals, business, or groups (i. e. fire) Non-diversifiable: impacts large segment of society at once (i. e. natural disaster, inflation, unemployment) Subjective risk; individual"s view of uncertainty or the situation involving risk (i. e. flying) Depends upon individual measures of attitude towards risk. Not easily measures; not easy to compare among individuals (risk lovers/takes, risk adverse, risk. Influence how a firm or key decision maker will handle risky situations.