CHAPTER
14
SLIDE 1
CHAPTER
14
Risk Management
14-1 Overview of Risk Management
14-2 Insurable Risks
14-3 Uninsurable Risks
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
14-1 Overview of Risk
Management
Goal 1 Identify the types of risks facing
businesses.
Goal 2 Describe ways that businesses can
deal with risks.
© 2012 Cengage Learning. All Rights Reserved.
CHAPTER
14
SLIDE 3
KEY TERMS
● risk
● economic risk
● personal risk
● property risk
● liability risk
● pure risk
● controllable risk
● insurance
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
14
SLIDE 4
IDENTIFYING RISKS
● Types of risks
● Economic and non-economic risks
● Pure and speculative risks
● Controllable and uncontrollable risks
● Insurable and uninsurable risks
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Principles of Business, 8e
CHAPTER
14
SLIDE 5
Checkpoint 
● What is a risk?
● Risk is the possibility of incurring a loss.
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Principles of Business, 8e
CHAPTER
14
SLIDE 6
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
CHAPTER
POSSIBLE WAYS TO DEAL
WITH RISK
Method
Avoid
Transfer
Insure
Assume
14
SLIDE 7
Activity
Choose not to complete the risky
activity
Find another business to complete
the activity
Purchase insurance to pay for any
losses
Complete the activity with full
responsibility
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
14
SLIDE 8
Checkpoint 
● Identify four ways that business can
deal with risks.
● Avoiding the risk
● Transferring the risk
● Insuring the risk
● Assuming the risk
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
14-2 Insurable Risks
Goal 1 Recognize important insurance
concepts.
Goal 2 Describe several types of business
insurance.
© 2012 Cengage Learning. All Rights Reserved.
CHAPTER
14
SLIDE 10
KEY TERMS
● insurer
● insured
● policyholder
● insurance policy
● premium
● claim
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
14
SLIDE 11
PURCHASING INSURANCE
● Insurance basics
● Insurance companies
● Insured losses
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
14
SLIDE 12
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
CHAPTER
14
SLIDE 13
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
CHAPTER
14
SLIDE 14
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
14-3 Uninsurable Risks
Goal 1 Describe why some business risks
are uninsurable.
Goal 2 List the strategies a company can
use to reduce the risks of doing
business internationally.
© 2012 Cengage Learning. All Rights Reserved.
CHAPTER
14
SLIDE 16
KEY TERMS
● property rights
● counterfeiting
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Principles of Business, 8e
CHAPTER
IDENTIFYING AND
MANAGING RISKS
14
SLIDE 17
● 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
CHAPTER
14
SLIDE 18
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
CHAPTER
14
SLIDE 19
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
CHAPTER
RISKS IN INTERNATIONAL
BUSINESS
14
SLIDE 20
● Strategies for reducing risk
● International property rights
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Principles of Business, 8e
CHAPTER
14
SLIDE 21
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.
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e