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© 2009 South-Western, Cengage Learning SLIDE

CHAPTER 14

14-114-1 Overview of Risk Management

14-214-2 Insurable Risks

14-314-3 Uninsurable Risks

Risk Management

Intro to Business, 7eIntro to Business, 7e

© 2009 South-Western, Cengage Learning SLIDE

Overview of Risk Overview of Risk ManagementManagement

Goals Identify the types of risks facing businesses.Describe ways that businesses can deal with

risks.

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Key TermsKey Terms

riskeconomic riskpersonal riskproperty risk

liability riskpure riskcontrollable riskinsurance

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© 2009 South-Western, Cengage Learning SLIDE

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IDENTIFYING RISKSIDENTIFYING RISKS

Types of risksEconomic and non-economic risksPure and speculative risksControllable and uncontrollable risks Insurable and uninsurable risks

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What is a risk?

Answer Risk is the possibility of incurring a

loss.

Checkpoint >>Checkpoint >>

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DEALING WITH RISKSDEALING WITH RISKS

Avoid the riskTransfer the riskInsure the riskAssume the risk

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© 2009 South-Western, Cengage Learning SLIDE

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Possible Ways to Deal With RiskPossible Ways to Deal With Risk

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Identify four ways that business can deal with risks.

Answeravoiding the risk transferring the risk insuring the riskassuming the risk

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Insurable RisksInsurable Risks

GoalsRecognize important insurance concepts.Describe several types of business insurance.

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Key TermsKey Terms

insurersinsuredpolicyholderinsurance policypremiumclaim

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PURCHASING INSURANCEPURCHASING INSURANCE

Insurance basicsInsurance companiesInsured losses

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© 2009 South-Western, Cengage Learning SLIDE

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What information should be considered when selecting an insurance company?

Answer When selecting an insurance company, one

should collect information about the type and cost of insurance and the quality of service provided by the company if a loss occurs.

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BUSINESS INSURANCEBUSINESS INSURANCE

Insuring personnelHealth insuranceDisability insuranceLife insurance

Insuring propertyInsuring business operations

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What are the three major areas that can be covered by business insurance?

Answerpersonnelpropertybusiness operations

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Uninsurable RisksUninsurable Risks

GoalsDescribe why some business risks are

uninsurable.List the strategies a company can use to

reduce the risks of doing business internationally.

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Key TermsKey Terms

property rightscounterfeiting

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IDENTIFYING RISKSIDENTIFYING RISKS

Types of uninsurable risksEconomic conditionsConsumer demandCompetitors’ actionsTechnology changesLocal factorsBusiness operations

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MANAGING RISKSMANAGING RISKS

Inform everyone in the business of the types of risks that are particularly important to their part of the operations

Implement measures to gather information and spot possible problems

Inspect facilities and equipmentBe active in local communitiesBuild relationships with government officials

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What are several things businesses can do to manage risks?

Answer Inform everyone in the business of the types of risks that are

particularly important to their part of the operations. Implement measures to gather information and spot possible

problems. Inspect facilities and equipment. Be active in local communities. Build relationships with government officials.

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RISKS IN RISKS IN INTERNATIONAL USINESSINTERNATIONAL USINESS

Strategies for reducing riskInternational property rights

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Why do U.S. companies have difficulty enforcing intellectual property rights in some international markets?Answer Some countries do not enforce property

rights laws that protect intellectual property, patents, trademarks, or copyrights, especially when the products of a foreign company are involved.

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