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Course Instructor: Pn Rodziah Ahmad
Email: [email protected]
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BWRR3033
RISK MANAGEMENT
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CHAPTER 1
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Introduction to Risk Risk
Risk classification
Risk and human
behaviour
Objective Define and explain
the meanings of risk
Distinguish among
the terms risk, periland hazard
Differentiatebetween pure andspeculative risks
Explain the humanattitudes towardsrisk
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W
H
ATRodziah (c)3
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RISK Probability that a problemoccurs
an event orincidentthat would be harmful
favourable unfavourable
consequences
exposures
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Risk and statistic:
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The variations fromthe expected value
Degree of risk:Higher the degree,
higher the probabilityof risk to occur
Measurement of risk:the higher number of
exposure unitincrease, the closerto actual results willbe to the expectedresults.
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RISK CLASSIFICATION
1 Objective Vs Subjective Risk
2 Fundamental Vs Specific Risk
3Pure Risk Vs Speculative Risk
4 Personal Vs Business Vs Societal Risk
5 Financial Vs Non-Financial Risk
6 Static Vs Dynamic RiskRodziah (c)8
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CLASSIFICATION OFPURE RISK
1
Personal Risk
Premature Death
Insufficient income after retirement
Poor health / Disability
Unemployment
2
Property Risk
Direct Loss
Indirect Loss
3
Liability Risk
Unintentional injury to others or damage of other property
4Risk arising from failure of others
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PERIL Cause of loss
Risk: Property Damage (house)The peril could be FIRE, BURGLARY,FLOOD, etc.
HAZARD Factors that increasesthe frequency and/or
severity of loss Physical Moral Morale Legal
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Type ofHuman
Behaviour
Risk
AverseRisk
Neutral
Risk
Taking
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