RMI 2101 Study Guide - Midterm Guide: Enterprise Risk Management, Human Capital, Risk Neutral

• School: Temple University
• Department: Risk Management and Insurance
• Course: RMI 2101
• Professor: Michael Mc Closkey

Document Summary

Regarding which events produce a loss for a firm or individual. Two things in life that are certain; death and taxes. Loss that is certain has a 100% chance. Probability ranges from 0 to 1 or 0% to 100% Static risk is risk that has not changed significantly over time; always present. Ie: driving a car, natural disaster, health/sickness, fire. Dynamic risk arises out of changing circumstances; new. Ie: traveling on an airplane, fear of spiders. An individual"s view of uncertainty of the situation involving risk. Depends on individual"s measures of attitude toward risk. Not easy to compare among individuals; everyone has a different fear. Risk lovers/takers, risk averse, or risk neutral. Influences how a firm or key decision maker will handle risky situations. Variation of actual outcomes around or about expected outcomes. Based on experience, data, or other means what we expect to happen. Problem: timing we are uncertain what will happen when.