Glossary

Risk pool refers to multiple subjects of insurance insured or reinsured by a single insurer where, to avoid risk concentration and improve risk distribution, different combinations of exposures, perils, and hazards will be underwritten.

Risk prioritization is the ranking of material risks on an appropriate scale, such as frequency and/or severity.

A risk profile is a measure of expected losses for a finite time period based on various items of historical data such as total losses, number of losses, average loss size, and payout patterns.

A risk purchasing group (RPG) is a group formed in compliance with the Risk Retention Act (RRA) of 1986 authorizing a group of insureds engaged in similar businesses or activities to purchase insurance coverage from a commercial insurer.

Risk quantification refers to the forecasting of loss frequency and severity to make risk financing decisions.

Risk reduction is a measure to reduce the frequency or severity of losses, also known as loss control.

In a practical enterprise risk management framework, a risk register is a list of the internal and external risks that confront a business.

Risk retention is the planned acceptance of losses by deductibles, deliberate noninsurance, and loss-sensitive plans where some, but not all, risk is consciously retained rather than transferred.

The Risk Retention Act (RRA) of 1986 is federal legislation passed in 1986 that authorized the formation of purchasing groups and group self-insurance programs for certain types of liability exposures.

A risk retention group (RRG) is an insurance company formed pursuant to the federal Risk Retention Act (RRA) of 1981, which was amended in 1986 to allow insurers underwriting all types of liability risks except workers compensation to avoid cumbersome multistate licensing laws.