RMI 2101 Study Guide - Final Guide: Service Provider, Swot Analysis, Risk Management

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

Document Summary

Pure risk uncertainty (not knowing the potential outcome) Regarding events which could produce a loss. Can be losses for firms and/or individuals. A loss which is certain has a 100% chance (death) Impossible loss has a 0% chance happening (when pigs fly) No certainty budget, plan and avoid the loss situation. *the loss is still present; no uncertainty about the loss. Probability ranges from 0 to 1 or 0% to 100% 0 or 0% impossible event (no risk) ----- 1 or 100% certain event (no risk) Risk does not equal the probability of the loss. Future states of the world: basic states: dead or alive. 3 future states of the world/outcomes: gain, loss or no gain/loss, ie: gambling, stock market, buying a home. Basis of enterprise risk management (erm: risk that involves speculation. 2 future states of the world/outcomes: ie: fire, flood, death, illness no winning. We hate these kinds of risk always negative unless it is positive.