Question 1

The most difficult and important step in the risk management process generally is:

Accepted Answer

A) evaluating risk 
B) reviewing the program 
C) selecting the best method(s)to handle the risk 
D) identifying the risk 
A) evaluating risk 
B) reviewing the program 
C) selecting the best method(s)to handle the risk 
D) identifying the risk

Question 2

A sushi bar is concerned about lawsuits from customers who may become ill after eating raw fish. Avoidance is not an option,since a sushi bar's main product line is raw fish. Which of the following would be the most practical loss prevention technique the restaurant could use?

Accepted Answer

A) Post a sign in the restaurant that says "Not responsible for anything" 
B) Requiring each customer to sign a legal waiver before serving them sushi 
C) Posting a warning on the menu that explains the risks of consuming raw fish 
D) Training servers to identify patrons who are feeling ill 
A) Post a sign in the restaurant that says "Not responsible for anything" 
B) Requiring each customer to sign a legal waiver before serving them sushi 
C) Posting a warning on the menu that explains the risks of consuming raw fish 
D) Training servers to identify patrons who are feeling ill

Question 3

Book value is the best measure of a direct property loss.

Accepted Answer

A) True 
 B)False

Question 4

All the following are true about OSHA except:

Accepted Answer

A) promotes a safe working environment for all U.S. workers 
B) encourages employers to remove all recognized hazards from the work environment 
C) provides for heavy fines for employer noncompliance with standards 
D) is directly responsible for reducing worker turnover 
A) promotes a safe working environment for all U.S. workers 
B) encourages employers to remove all recognized hazards from the work environment 
C) provides for heavy fines for employer noncompliance with standards 
D) is directly responsible for reducing worker turnover

Question 5

To apply the rules of risk management,the risk manager must know all of the following except:

Accepted Answer

A) the exact amount of losses the firm is going to have in a certain period of time 
B) how to identify the loss potential to which the firm is exposed 
C) how to measure the loss potential to which the firm is exposed 
D) how to measure the benefits and costs of alternative risk bearing devices for given situations 
A) the exact amount of losses the firm is going to have in a certain period of time 
B) how to identify the loss potential to which the firm is exposed 
C) how to measure the loss potential to which the firm is exposed 
D) how to measure the benefits and costs of alternative risk bearing devices for given situations

Question 6

Risk managers can identify potential property losses using:

Accepted Answer

A) walking tours 
B) checklists 
C) flowcharts 
D) all of the above 
A) walking tours 
B) checklists 
C) flowcharts 
D) all of the above

Question 7

An automobile's airbag is primarily there for:

Accepted Answer

A) loss prevention 
B) loss reduction 
C) loss avoidance 
D) risk assumption 
A) loss prevention 
B) loss reduction 
C) loss avoidance 
D) risk assumption

Question 8

All the following are objectives of risk management except?

Accepted Answer

A) to insure all exposures to loss 
B) to make efficient before the loss arrangements for an after the loss balance between resources needed and resources required to preserve operating effectiveness 
C) eliminate duplicate insurance coverage 
D) develop and maintain plant safety program 
A) to insure all exposures to loss 
B) to make efficient before the loss arrangements for an after the loss balance between resources needed and resources required to preserve operating effectiveness 
C) eliminate duplicate insurance coverage 
D) develop and maintain plant safety program

Question 9

The maximum probable loss is the most unlikely maximum amount of damage a peril might cause under typical circumstances.

Accepted Answer

A) True 
 B)False

Question 10

The pre-loss risk management job is best represented by which sequence of events?

Accepted Answer

A) identify, measure, insure exposures 
B) identify, measure, consider alternatives, reevaluate decisions 
C) loss prevention, consider alternatives, reevaluate decisions 
D) risk reduction, risk transfer, insure, loss prevention 
A) identify, measure, insure exposures 
B) identify, measure, consider alternatives, reevaluate decisions 
C) loss prevention, consider alternatives, reevaluate decisions 
D) risk reduction, risk transfer, insure, loss prevention

Question 11

Risk avoidance and loss prevention are the same thing.

Accepted Answer

A) True 
 B)False

Question 12

Assume you own a house in rural Arkansas with a pier foundation (concrete blocks on each of the four corners).Your prospective insurance company indicates they will not insure your home unless you take some loss prevention steps. Which of the following steps is the best loss prevention measure?

Accepted Answer

A) join a local volunteer fire department 
B) enclose the open foundation with bricks to stop trash and leaves from accumulating 
C) put fire extinguishers on the front porch and in the kitchen 
D) put smoke alarms in each room 
A) join a local volunteer fire department 
B) enclose the open foundation with bricks to stop trash and leaves from accumulating 
C) put fire extinguishers on the front porch and in the kitchen 
D) put smoke alarms in each room

Question 13

If the chance of loss is high and loss severity is high,generally the most appropriate risk management tool is:

Accepted Answer

A) risk transfer 
B) risk reduction 
C) risk assumption 
D) risk avoidance 
A) risk transfer 
B) risk reduction 
C) risk assumption 
D) risk avoidance

Question 14

Self-insurance involves risk assumption.

Accepted Answer

A) True 
 B)False

Question 15

If a private elementary school having a single building were to lose the building in a tornado,it is likely that the largest category of loss would be:

Accepted Answer

A) property taxes 
B) indirect loss of income and continuing expenses until school returns to its normal status 
C) liability loss 
D) key personnel loss 
A) property taxes 
B) indirect loss of income and continuing expenses until school returns to its normal status 
C) liability loss 
D) key personnel loss

Question 16

Loss prevention is the best risk management tool when the chance of loss is __________________ and the potential loss severity is __________________.

Accepted Answer

A) high, high 
B) high, low 
C) low, low 
D) low, high 
A) high, high 
B) high, low 
C) low, low 
D) low, high

Question 17

Explain the concept of self-insurance. Why is all self-insurance assumption,but not all assumption self-insurance?

Accepted Answer

Self
insurance is where an organization

Question 18

Mr.VanDelinder buys a $50,000 car. Rather than buying insurance on the car,he sets aside $30,000 in a savings account to cover possible losses due to any accident. He is:

Accepted Answer

A) self insuring 
B) eliminating risk through the use of a contingency fund 
C) assuming risk 
D) decreasing his risk of physical loss 
A) self insuring 
B) eliminating risk through the use of a contingency fund 
C) assuming risk 
D) decreasing his risk of physical loss

Question 19

What are the three basic methods of dealing with risk in the risk management process?

Accepted Answer

The only three alternatives to risk are

Question 20

OSHA is a federal loss prevention law.

Accepted Answer

A) True 
 B)False

Exam 3: Risk Management

The most difficult and important step in the risk management process generally is:

A sushi bar is concerned about lawsuits from customers who may become ill after eating raw fish. Avoidance is not an option,since a sushi bar's main product line is raw fish. Which of the following would be the most practical loss prevention technique the restaurant could use?

Book value is the best measure of a direct property loss.

All the following are true about OSHA except:

To apply the rules of risk management,the risk manager must know all of the following except:

Risk managers can identify potential property losses using:

An automobile's airbag is primarily there for:

All the following are objectives of risk management except?

The maximum probable loss is the most unlikely maximum amount of damage a peril might cause under typical circumstances.

The pre-loss risk management job is best represented by which sequence of events?

Risk avoidance and loss prevention are the same thing.

Assume you own a house in rural Arkansas with a pier foundation (concrete blocks on each of the four corners).Your prospective insurance company indicates they will not insure your home unless you take some loss prevention steps. Which of the following steps is the best loss prevention measure?

If the chance of loss is high and loss severity is high,generally the most appropriate risk management tool is:

Self-insurance involves risk assumption.

If a private elementary school having a single building were to lose the building in a tornado,it is likely that the largest category of loss would be:

Loss prevention is the best risk management tool when the chance of loss is __________________ and the potential loss severity is __________________.

Explain the concept of self-insurance. Why is all self-insurance assumption,but not all assumption self-insurance?

Mr.VanDelinder buys a $50,000 car. Rather than buying insurance on the car,he sets aside $30,000 in a savings account to cover possible losses due to any accident. He is:

What are the three basic methods of dealing with risk in the risk management process?

OSHA is a federal loss prevention law.

Fundamentals and Terminology

Defining the Insurable Event

Financial Services Companies

Insurance Occupations

the Insurance Market: the Economic Problem

Insurance Regulation

Insurance Contracts

Basic Property and Liability Insurance Contracts

Homeowners Insurance

the Personal Auto Policy

Professional Financial Planning

Life Insurance Policies

Standard Life Insurance Contract Provisions And Options

Annuities

Medical Expense and Disability Insurance

Advanced Topics in Risk Management

Commercial Property Insurance

Commercial Liability Insurance

Bonding,Crime Insurance and Reinsurance

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

Filters

Loss prevention is the best risk management tool when the chance of loss is and the potential loss severity is .