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Business Protection Bulletin


By October 8, 2013No Comments

If you want to manage risk within your firm, you need to familiarize yourself with risk-management language. Here are some basic definitions, provided by the National Alliance for Insurance Education & Research, which you can use to build your knowledge base:

    • Exposure: A situation, practice or condition that might lead to a loss; an activity or resource (assets, people).
    • Peril: A “cause” of loss; an event that might cause a loss.
    • Hazard: A condition within an exposure that might lead to an incident; “a peril about to happen.”
    • Incident: An event that disrupts normal activities and might become a loss or claim; “a near miss.” Lifecycle of an incident: Pre-incident, incident, immediate post-incident, post incident, rehabilitation (repair, recovery).
    • Accident: An incident resulting in injury or damage to person or property which has, or will become, a loss or claim; “an unplanned event definite as to time and place that causes bodily injury or property damage.”
    • Occurrence. An accident with the limitation of time removed.
    • Loss: A reduction in value.
    • Claim: A demand or obligation for payment as a result of a loss.
    • Frequency: The number of times an incident occurs.
    • Severity: The monetary impact of a loss.
    • Expected losses: Loss projections (“loss pics”) based on probability distributions and statistics; frequently developed using actuarial techniques.

For a complimentary review of the risks your business faces, please feel free to contact us at any time.