Exam 1: Risk in Our Society

Which of the following are often consequences of long-term disability? I.Continuing medical expenses II.Loss or reduction of employee benefits

Katelyn was just named Risk Manager of ABC Company.She has decided to create a risk management program which considers all of the risks faced by ABC-pure,speculative,operational,and strategic-in a single risk management program.Such a program is called a(n)

Some characteristics of the judicial system and regulatory environment increase the frequency and severity of loss.This hazard is called

Objective risk is defined as

Brad started a pest control business.To protect his personal assets against liability arising out of the business,Brad incorporated the business.Brad's use of the corporate form of organization to shield against personal liability claims illustrates

Jenna opened a successful restaurant.One night,after the restaurant had closed,a fire started when the electrical system malfunctioned.In addition to the physical damage to the restaurant,Jenna also lost profits that could have been earned while the restaurant was closed for repairs.The lost profits are an example of

All of the following are characteristics of the liability risk that most people face EXCEPT

The use of fire-resistive materials when constructing a building is an example of

An individual's personal estimate of the chance of loss is

Dense fog that increases the chance of an automobile accident is an example of a

Which of the following statements about chance of loss and risk is (are)true? I.If the chance of loss is identical for two groups,the objective risk must be the same. II.Two individuals may perceive differently the risk inherent in a given activity.

Which of the following statements about a priori probabilities is correct?

An automobile that is a total loss as a result of a collision is an example of which of the following types of risk? I.Speculative risk II.Diversifiable risk

Traditionally,risk has been defined as

The long-run relative frequency of an event based on the assumption of an infinite number of observations with no change in the underlying conditions is called

ABC Health Insurance Company sells health insurance in one state.Recently,that state's legislature passed a law forbidding health insurers from considering an individual's health history when selecting applicants to insure.This change in law will increase the possibility of unprofitable results for ABC.This type of hazard is an example of

ABC Insurance Company plans to sell homeowners insurance in five Western states.ABC expects that 8 homeowners out of every 100,on average,will report claims each year.The variation between the rate of loss that ABC expects to occur and the rate of loss that actually does occur is called

From the insured's perspective,the use of deductibles in insurance contracts is an example of

Which of the following is a reason why premature death may result in economic insecurity? I.Additional expenses associated with death may be incurred. II.The income of the deceased person's family may be inadequate to meet its basic needs.

Which of the following statements about speculative risks is true?