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3、英文版

　　Chapter 01
　　Definitions of Risk
　　?Risk: Uncertainty concerning the occurrence of a loss
　　–1. The result of the risk is the possible loss.
　　–2. Uncertainty is the core of risk.
　　?A peril is defined as the cause of the loss
　　–Immediate or external causes
　　?A hazard is a condition that increases the chance of loss
　　–Indirect or intrinsic causes
　　?Physical hazard: A physical condition that increases the frequency or severity of a loss. In a word, you can see with your eyes.
　　?Moral hazard: Personal dishonesty or character increase the frequency or severity of losses.
　　?Attitudinal hazard：Carelessness or indifference to loss leads to increased frequency or severity of loss.
　　?Legal hazard：A legal system or regulation that increases the frequency or severity of losses.
　　Classification of Risk
　　?Pure and Speculative Risk
　　–A pure risk is one in which there are only the possibilities of loss or no loss (accident、earthquake)
　　–A speculative risk is one in which both profit or loss are possible (gambling、investment、technical development)
　　?Diversifiable Risk and Nondiversifiable Risk
　　–A diversifiable risk affects only individuals or small groups (car theft). （nonsystematic or particular risk）
　　–A nondiversifiable risk affects the entire economy or large numbers of persons or groups within the economy (hurricane). （systematic risk or fundamental risk）
　　–Government assistance may be necessary to insure nondiversifiable risks.
　　?Enterprise risk encompasses all major risks faced by a business firm, which include: pure risk, speculative risk, strategic risk, operational risk, and financial risk
　　–Financial Risk refers to the uncertainty of loss because of adverse changes in commodity prices, interest rates, foreign exchange rates, and the value of money.
　　Major Personal Risks and Commercial Risks
　　?Personal risks
　　?Property risks
　　?Liability risks
　　?Commercial risks

　　?Personal risks involve the possibility of a loss or reduction in income, extra expenses or depletion of financial assets:
　　–Premature death of family head:loss of value of life; funeral and medical expenses, estate disposal costs; income fell sharply; non-economic cost
　　–Insufficient income during retirement
　　?Most workers are not saving enough for a comfortable retirement
　　–Poor health
　　–Catastrophic medical bills ；loss of earned income
　　–因病致贫、因病返贫
　　–A worker has a 30 percent chance of becoming incapacitated from age 20 to retirement age
　　–Involuntary unemployment
　　–Causes：economic recession；Adjustment of technical structure；The allocation of labor markets is imperfect
　　?Property risks：having property damaged or lost from numerous causes
　　?Direct loss vs. indirect loss
　　–A direct loss is a financial loss that results from the physical damage, destruction, or theft of the property, such as fire damage to a home
　　–An indirect loss :results indirectly from the occurrence of a direct physical damage or theft loss, such as the additional living expenses after a fire to a home. These additional expenses would be a consequential loss.
　　?Liability risks involve the possibility of being held liable for bodily injury or property damage to someone else
　　–There is no maximum upper limit with respect to the amount of the loss（including indirect loss）
　　–A lien can be placed on your income and financial assets
　　–Defense costs can be enormous
　　?Commercial Risks（enterprises）
　　–Firms face a variety of pure risks that can have serious financial consequences if a loss occurs:
　　?Property risks, such as damage to buildings, furniture and office equipment
　　?Liability risks, such as lawsuits for defective products, pollution of the environment, and sexual harassment
　　?Loss of business income, when the firm must shut down for some time after a physical damage loss
　　?Other risks to firms include crime exposures, human resource exposures, foreign loss exposures, intangible property exposures, and government exposures
　　Chapter02
　　Basic Characteristics of Insurance
　　?Pooling of losses
　　–Spreading losses incurred by the few over the entire group
　　–Core of insurance
　　–Risk reduction based on the Law of Large Numbers
　　?Payment of fortuitous losses
　　–Insurance pays for losses that are unforeseen, unexpected, and occur as a result of chance
　　?Risk transfer
　　–A pure risk is transferred from the insured to the insurer, who typically is in a stronger financial position
　　?Indemnification
　　The insured is restored to his or her approximate financial position prior to the occurrence of the loss