# Explain subjective risk.

1. Refer to the Case Study Flint Michigan Water Contamination folder on

Blackboard and read the applicable articles.

1. Recall our discussion in class concerning three types of pure risk. What is the

major type of pure risk being discussed in this article? [2 points]

1. What is the loss associated with this type of pure risk? How is this loss evaluated

in terms of financial consequences? [2 points]

1. What is the peril involved? [2 points]
1. What type of hazard is illustrated here? Explain why your answer is an example

of this type of hazard. [2 points]

1. Why is your answer in part (d) above considered to be an example of a hazard in

general? In other words, why does it fit into the definition of a hazard? [2 points]

1. Recall our discussion in class concerning the cost or burden of risk. Identify and briefly discuss two examples of cost of risk illustrated in this article. Briefly explain why each example you chose from the article represents a cost of

risk. [2 points]

1. Refer to the article in Topic 1 Wizard of Odds.
1. Explain subjective risk.
1. What influences it?
1. How does it differ from objective risk?

Give an example, be creative (DO NOT use an example from the article as your example) [3 points]

1. Refer to the Topic 1 article, “Whatever happened to the 100-year event.” Identify a static risk and a dynamic risk discussed in the article. [2 points]
1. Refer to the article In Study, Texting Lifts Crash Risks by Large Margin. The crash is the peril.
1. Does the article, in general, highlight frequency, severity or both. Explain and use

a specific example from the article. [2 points]

1. Provide and explain an example of morale hazard in the article. Does the

example impact frequency, severity or both. Explain [2 points]

1. Provide and explain an example of a legal hazard in the article. [2 points]
1. Identify the peril, hazard, and type of hazard for the following examples.
1. Steve owns a Ford 250 and lives in the city of Philadelphia. Steve, without thinking, left his vehicle unlocked before he went inside his apartment. When Steve came outside the next day, he realized that his truck was stolen. [2 points]
1. Joshua has recently purchased an auto policy (which now includes collision) for his 2008 Mazda 6. Joshua hates his Mazda and wants to purchase a new vehicle before the summer arrives. Therefore, Joshua decided to purposely crash his car into a tree and file a claim with his insurer. [2 points]
1. Matthew owns a house right next to a riverbed. During a storm, Matthew’s

basement&nbsp;&nbsp; faced a lot of water damage due to it being flooded. [2 points]

1. Two firms, A and B each have 100 company cars. Firm A expects physical damage to 20 cars per year while firm B expects physical damage to 10 cars per year. At the end of the fiscal year, Firm A has 25 cars damaged and firm B has 15 cars damaged. Which firm faces more risk of car damage? Show all work and results for all answers. [1 point]