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Chance of Loss
Objective Probability
Loss exposure
Objective Risk
Subjective Risk
Subjective Probability
Peril
Cause of loss
Example : if your house burn of fire,
then the peril is the fire
Hazard
Physical Hazard
Moral Hazard
Carelessness or indifference to a
loss, which increases the frequency
or severity of loss
Example : Leaving car keys in
unlocked car which increases the
chance of theft
Legal Hazard
Characteristics of the legal system or
regulatory environment that
increases the frequency or severity of
loss
Example : Adverse jury verdicts or
large damage awards in liability
lawsuits
Pure Hazard
Diversifiable Risk
Non-diversifiable Risk
Enterprise Risk
Strategic Risk
Operational Risk
Speculative hazard
Financial Risk
Avoidance
Active retention
Loss Prevention
Loss Reduction
Self-Insurance
Retention Limits
Retention
Non-insurance Transfer