© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 14 SLIDE Overview of Risk Management Insurable Risks Uninsurable Risks 14 C H A P T E R Risk Management
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 14 SLIDE 2 IDENTIFYING RISKS ●Types of risks ●Economic and non-economic risks ●Pure and speculative risks ●Controllable and uncontrollable risks ●Insurable and uninsurable risks
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 14 SLIDE 3 Checkpoint ●What is a risk? ●Risk is the possibility of incurring a loss.
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 14 SLIDE 4 DEALING WITH RISKS ●Avoid the risk ●Transfer the risk ●Insure the risk ●Assume the risk
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 14 SLIDE 5 POSSIBLE WAYS TO DEAL WITH RISK MethodActivity AvoidChoose not to complete the risky activity TransferFind another business to complete the activity InsurePurchase insurance to pay for any losses AssumeComplete the activity with full responsibility
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 14 SLIDE 6 PURCHASING INSURANCE ●Insurance basics ●Insurance companies ●Insured losses
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 14 SLIDE 7 Checkpoint ●What information should be considered when selecting an insurance company? ●When selecting an insurance company, you should collect information about the type and cost of insurance and the quality of service provided by the company if a loss occurs.
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 14 SLIDE 8 BUSINESS INSURANCE ●Insuring personnel ●Health insurance ●Disability insurance ●Life insurance ●Insuring property ●Commercial property insurance ●Vehicle insurance ●Insuring business operations ●Business interruption insurance ●Liability insurance
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 14 SLIDE 9 Checkpoint ●What are the three major areas that can be covered by business insurance? ●Personnel ●Property ●Business operations
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 14 SLIDE 10 IDENTIFYING AND MANAGING RISKS ●Insurable risk ●Risk and amount of loss must be predictable ●Uninsurable risk factors ●Economic conditions ●Consumer demand ●Competitors’ actions ●Technology changes ●Local factors ●Business operations
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 14 SLIDE 11 MANAGING 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 equipment ●Be active in local communities ●Build relationships with government officials
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 14 SLIDE 12 Checkpoint ●What are several things businesses can do to manage 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 equipment. ●Be active in local communities. ●Build relationships with government officials.
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 14 SLIDE 13 RISKS IN INTERNATIONAL BUSINESS ●Strategies for reducing risk ●International property rights
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 14 SLIDE 14 Checkpoint ●Why do U.S. companies have difficulty enforcing intellectual property rights in some international markets? ● 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.