RMI 2301 Chapter Notes - Chapter 3: Retail Loss Prevention, Cash Flow, Opportunity Cost
17 Feb 2019
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Document Summary
Risk management is a process that identifies loss exposures faced by an organization and selects the most appropriate techniques for treating such exposures. Objectives of risk management: pre-loss objectives, post-lost objectives. Important objectives before a loss occurs include economy, reduction of anxiety, and meeting legal obligations. After a loss occurs objectives include survival of the firm, continued operations, stability of earnings, continued growth, and social responsibility. Four steps in the risk management process: ** Identify loss exposures; measure and analyze the loss exposures; select the appropriate combination of techniques for treating the loss exposure; implement and monitor the risk management program. Identify loss exposures: this step involves a painstaking review of all potential losses. Loss frequency refers to the probable number of losses that may occur during some given time period. Loss severity refers to the probable size of the losses that may occur. Risk control refers to techniques that reduce the frequency or severity of losses.
