Why Does One Assess the Severity of Potential Losses When

question 58

Multiple Choice

Why does one assess the severity of potential losses when creating a legal risk management plan?

• A) to establish insurance policies for employees exposed to greater risk
• B) to delegate responsibility for devising the risk management plan
• C) to prioritize identified risks and guide a given risk through the process
• D) to identify mechanisms to adopt,avoid,or eliminate existing risks

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Definitions:

Variable Cost

Costs that vary directly with the level of production or service activity, such as raw materials and direct labor.

Machine-hour

A unit of measure representing the operation of a machine for one hour, often used in cost accounting to allocate expenses.

Cost Formula Equation

An equation used to predict the total cost of production, combining both fixed and variable costs.

High-low Method

A technique used in cost accounting to estimate fixed and variable costs based on the highest and lowest levels of activity.