AIM flashcards
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33 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Leadership vs. management
- Management reduces complexity through planning, organizing, and controlling; leadership produces change by setting direction, aligning people, and motivating them.
- Legitimate power
- Influence derived from a formal position or title in the organizational hierarchy, accepted by subordinates as the right to direct their work.
- Referent power
- Influence based on followers' identification with, respect for, or liking of the leader, independent of formal authority or rewards.
- Expert power
- Influence that comes from specialized knowledge, skill, or experience that others need and cannot easily replace.
- Coercive power
- Influence based on the ability to impose penalties, sanctions, or undesirable assignments; effective short term but tends to reduce commitment.
- Situational leadership
- A contingency model in which the leader adjusts direction and support to follower readiness, moving from telling to selling, participating, and delegating.
- Span of control
- The number of subordinates reporting to one manager; wider spans suit routine standardized work, narrower spans suit complex or high-risk work.
- Risk management process
- A repeating cycle of identifying exposures, measuring frequency and severity, selecting treatment methods, implementing them, and monitoring results.
- Total cost of risk
- The sum of insurance premiums, retained losses, deductibles, risk control expenses, and administrative costs of the risk management program.
- Expected loss formula
- Expected loss equals claim frequency (claims per exposure unit) multiplied by average claim severity; used to compare retention against transfer.
- Risk map
- A grid plotting exposures by likelihood and impact; high-likelihood high-impact items require immediate treatment while low-low items are monitored.
- Risk control vs. risk financing
- Risk control reduces frequency or severity of losses; risk financing funds losses after they occur through retention or transfer.
- Retention decision rule
- Retain exposures when expected losses plus administrative cost are lower than the risk charge and loading embedded in transfer pricing.
- Accountability principle
- Authority to decide must accompany assigned responsibility; mismatches create role ambiguity, delay, and diffusion of ownership.
- Exposure unit
- The denominator used to measure loss frequency, such as payroll per thousand dollars, vehicle-years, or square footage of insured property.
- Delegation
- Transferring specific tasks and the authority to complete them while the manager retains ultimate accountability for outcomes.
- Enterprise risk management
- An integrated approach that identifies, assesses, and manages risks across all organizational silos in relation to overall strategy and objectives.
- Three lines model
- First line owns and manages risk, second line provides oversight and compliance, third line internal audit gives independent assurance to the board.
- Risk appetite vs. tolerance
- Risk appetite is the amount of risk the organization accepts pursuing objectives; tolerance is the acceptable variation around that appetite.
- Black swan event
- A rare, high-impact event considered improbable beforehand but explained as predictable after the fact; undermines reliance on historical averages.
- Fat-tailed distribution
- A probability distribution in which extreme outcomes occur far more often than a normal distribution predicts, making averages and standard deviations misleading.
- VUCA
- An acronym for volatility, uncertainty, complexity, and ambiguity, used to describe environments requiring flexible, information-seeking, and experimental leadership.
- Scenario planning
- A method of testing strategy against several plausible futures rather than one forecast, reducing overconfidence in single-point projections.
- Kotter's eight steps
- A change sequence starting with urgency and a guiding coalition and ending with anchoring changes in culture; skipping early steps undermines later ones.
- Psychological safety
- A climate in which people believe they can raise concerns and report errors without punishment, improving early disclosure of emerging risks.
- Systemic risk
- Risk of disruption spreading across an entire system or market, so that correlated exposures defeat diversification across traditional insurance lines.
- ISO 31000 process
- A risk management framework covering scope and context, identification, analysis, evaluation, treatment, and ongoing communication and monitoring.
- Risk culture
- The shared values and behaviors that determine how members of an organization identify, discuss, and act on risk in daily decisions.
- Stress testing
- Applying severe but plausible adverse scenarios to a portfolio or plan to reveal vulnerabilities that normal-range assumptions would conceal.
- Agile leadership
- A leadership style using short iterative cycles, empowered teams, and rapid feedback to respond to fast-changing risk conditions.
- Climate risk
- Physical and transition risks from changing climate, including extreme weather losses and losses from the shift to a low-carbon economy.
- Cyber risk aggregation
- The tendency of cyber incidents to affect many insureds simultaneously through shared technology, creating correlated losses that challenge diversification.
- Risk owner
- The named individual accountable for managing a specific risk and its treatment plan, ensuring clear ownership rather than diffuse responsibility.