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LAW 122 (625)
Chapter 1

LAW122 Chapter 1 Notes.docx

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Department
Law and Business
Course
LAW 122
Professor
Jared C.Allen
Semester
Winter

Description
LAW122 Chapter 1 Risk Management is the process of identifying evaluating and responding to the possibility go harmful eventsIdentify the risk associated with the situation you are inEvaluate which would be the best way to go about solving the problemsResponse by choosing the best option that will benefit you and keep the risk low Strategies to Managing Risk 1 Risk Avoidance depending on the severity of the risk they should perhaps be avoided all together Ex car that explodes on impact should be taken off the market 2 Risk Reduction some risk can be reduced to an acceptable risk level Ex a bank loans a large amount of money to a company but knows that if the market goes down they wont be able to pay it back The bank then forces the company to put its factory up as a liability so if they cant pay at least they get the property 3 Risk Shifting if a risk cannot be avoided or reduced it may be shifted onto another party Ex a construction company can either rent a crane and an operator or rent a crane and use one of their own employees to drive it If the contracted crane operator hurts someone they can only sue the contractor But if it is an employee of the company the companies by law will be sued a Insurance is a contract in which one party agrees in exchange for a price to pay a certain amount of money if another party suffers a loss i Liability Insurance provides a benefit if the purchaser is held liable for doing something wrong ii Property Insurance provides a benefit if the purchasers property is damaged lost or destroyed b Exclusion and Limitation Clauses these are things in contracts that change the usual rules of liability It may try to exclude all risk of liability or it may exclude liability for certain types of acts or certain types of losses or it may limit the amount of compensation that is available Ex a courier company may say is not responsible for more than 100 if it loses damages or destroys a package c Incorporation shifting the risk by making a business a corporation This way the deb is help on the company and not the directorsshareholders 4 Risk Acceptance accepted whatever risk Ex if a golf course is close to some houses they may just accept the risk of a window being broken if the risk factor is small The Nature of Law A Law is a rule that can be enforced by the courts
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