MATH 573 Study Guide - Final Guide: Enterprise Risk Management, Parachuting, Punitive Damages
Document Summary
Activities or attempts to control the risk. Manage trm (pure risk) and erm (speculative risk) Goal minimize financial impact on organization (defensive) Implementation of the chosen options: identify loss exposures. Possible financial loss to entity as the result of peril striking something of value. Failure to properly identify can lead to bankruptcy (example: enron) Example: walk around, identify things that look unsafe. Example: leases, hold harmless agreements: contract analysis, look at past info. Might not work because dynamic risk might not show up in data: share loss information with similar firms through trade associates, checklists/standardized survey from insurance companies, flow chart approach, ask employees/managers in the firm, financial statement approach. Balance sheets, assets physical (building), non physical (trademark, patent, copyright, goodwill) Legal interest in property financial interest/stake in property. Ownership interest most common present/future ownership interest. Firm suffers primary loss => secondary loss => indirect exposure. The nominal productive process of a firm is interrupted.
