Question 1

Insurance is the best risk management tool when the chance of loss is _________________ and the loss severity is _____________________.

Accepted Answer

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

Question 2

Which of the following are examples of loss REDUCTION techniques?
I.wearing your seat belt while driving your car
II.polio vaccinations
III.keeping poisons locked up and out of the reach of small children
IV.wearing a helmet while skateboarding.

Accepted Answer

A) I and IV only 
B) I and III only 
C) I, II and III only 
D) I, II III and IV 
A) I and IV only 
B) I and III only 
C) I, II and III only 
D) I, II III and IV

Question 3

Risk assumption is the best risk management choice when the chance of loss is ___________ and the potential severity of loss is _______________.

Accepted Answer

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

Question 4

PRIMA is a risk management association for people involved in public sector risk management.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following pools would be the WORST subject for a fully-funded self-insurance arrangement?

Accepted Answer

A) 10,000 U.S. postal vehicles in Nevada, each unit worth $18,000 
B) 500 U.S. Post Offices in Nevada, average value is $1,250,000 per office 
C) 80,000 outdoor U.S. post office mail boxes, each unit worth $200 
D) $50,000 life insurance on all postal employees in Nevada who could pass a medical exam (over 3,000 postal employees) 
A) 10,000 U.S. postal vehicles in Nevada, each unit worth $18,000 
B) 500 U.S. Post Offices in Nevada, average value is $1,250,000 per office 
C) 80,000 outdoor U.S. post office mail boxes, each unit worth $200 
D) $50,000 life insurance on all postal employees in Nevada who could pass a medical exam (over 3,000 postal employees)

Question 6

It is important for a retail store to quickly resume operations after a direct loss primarily because

Accepted Answer

A) looting will occur 
B) retail merchandise goes out of style quickly 
C) most property insurance contracts demand that operations resume immediately, or as soon as possible, after a direct loss 
D) customers can be quickly and permanently lost if operations do not continue 
A) looting will occur 
B) retail merchandise goes out of style quickly 
C) most property insurance contracts demand that operations resume immediately, or as soon as possible, after a direct loss 
D) customers can be quickly and permanently lost if operations do not continue

Question 7

The risk manager is concerned primarily with the management of

Accepted Answer

A) physical loss of property 
B) pure risks 
C) only pure risks that cannot be insured 
D) interest rate risk 
A) physical loss of property 
B) pure risks 
C) only pure risks that cannot be insured 
D) interest rate risk

Question 8

When faced with a risk of loss that is low frequency-high severity in nature,a prudent risk manager would choose which of the following methods for handling the loss exposure?

Accepted Answer

A) Assumption 
B) Avoidance 
C) Transfer 
D) Mediate 
A) Assumption 
B) Avoidance 
C) Transfer 
D) Mediate

Question 9

Which of the following statements about liability losses is true?

Accepted Answer

A) They arise from two sources: the obligation to pay legal damages, and the resulting bad publicity 
B) The obligation to pay legal damages is always more expensive than the cost of defense 
C) Defense costs can be expensive, unless the court finds that the plaintiffs claims are groundless 
D) None of the above are true 
A) They arise from two sources: the obligation to pay legal damages, and the resulting bad publicity 
B) The obligation to pay legal damages is always more expensive than the cost of defense 
C) Defense costs can be expensive, unless the court finds that the plaintiffs claims are groundless 
D) None of the above are true

Question 10

Which of the following pools would be the BEST subject for a fully-funded self-insurance arrangement?

Accepted Answer

A) Employment practices liability coverage for a petroleum refinery located in Texas 
B) Automobile physical damage coverage for a national rental car chain, with 100 locations and approximately 3,000 automobiles of similar value at each location 
C) Medical malpractice liability coverage for all doctors and nurses employed by a group of 3 hospitals in Florida 
D) $50,000 of life insurance on every employee of a life insurance company located in New York, with no physical exam required to obtain insurance. 
A) Employment practices liability coverage for a petroleum refinery located in Texas 
B) Automobile physical damage coverage for a national rental car chain, with 100 locations and approximately 3,000 automobiles of similar value at each location 
C) Medical malpractice liability coverage for all doctors and nurses employed by a group of 3 hospitals in Florida 
D) $50,000 of life insurance on every employee of a life insurance company located in New York, with no physical exam required to obtain insurance.

Question 11

Which of the following is an appropriate method for calculating the financial impact on the firm that results from the loss of a key employee?

Accepted Answer

A) research comparable salaries on employment data websites 
B) never let these employees be in the same building at the same time 
C) a multiple of the key person's salary 
D) calculate the net present value of the future salary owed to the employee under his/her existing employment contract. 
A) research comparable salaries on employment data websites 
B) never let these employees be in the same building at the same time 
C) a multiple of the key person's salary 
D) calculate the net present value of the future salary owed to the employee under his/her existing employment contract.

Question 12

Which of the following would not normally be identified in the risk management process?

Accepted Answer

A) property exposures 
B) speculative exposures 
C) indirect loss exposures 
D) operations exposures 
A) property exposures 
B) speculative exposures 
C) indirect loss exposures 
D) operations exposures

Question 13

Which tool or tools is/are used by most individuals for handling the loss exposure of physical damage to their vehicles caused by collisions?
i. Avoidance
II. Control 
III. Retention
IV. Insurance

Accepted Answer

A) I, II, III, and IV 
B) II and IV only 
C) III and IV only 
D) II, III and IV only 
A) I, II, III, and IV 
B) II and IV only 
C) III and IV only 
D) II, III and IV only

Question 14

Installing a burglar alarm is an example of which one of the following:

Accepted Answer

A) loss reduction 
B) consequential loss reserve 
C) self insurance 
D) loss prevention 
A) loss reduction 
B) consequential loss reserve 
C) self insurance 
D) loss prevention

Question 15

All of the following are ways of managing risk mentioned in the text except:

Accepted Answer

A) transfer 
B) competitive bidding 
C) avoidance 
D) assumption 
A) transfer 
B) competitive bidding 
C) avoidance 
D) assumption

Question 16

All of the following are examples of loss reduction except:

Accepted Answer

A) fire walls 
B) improved lighting in the work place 
C) salvage operations 
D) training replacement personnel 
A) fire walls 
B) improved lighting in the work place 
C) salvage operations 
D) training replacement personnel

Question 17

The damage caused by an indirect loss can be greater in amount than the damage caused by direct loss in the same occurrence.

Accepted Answer

A) True 
 B)False

Question 18

From the standpoint of the insured,deductibles in insurance contracts are a form of:

Accepted Answer

A) Risk transfer 
B) Loss control 
C) Risk avoidance 
D) Risk retention 
A) Risk transfer 
B) Loss control 
C) Risk avoidance 
D) Risk retention

Question 19

Loss prevention activities,if successful,may increase risk (uncertainty).

Accepted Answer

A) True 
 B)False

Question 20

Fire sprinklers are an example of loss reduction.

Accepted Answer

A) True 
 B)False

Exam 3: Risk Management

Insurance is the best risk management tool when the chance of loss is _________________ and the loss severity is _____________________.

Which of the following are examples of loss REDUCTION techniques? I.wearing your seat belt while driving your car II.polio vaccinations III.keeping poisons locked up and out of the reach of small children IV.wearing a helmet while skateboarding.

Risk assumption is the best risk management choice when the chance of loss is ___________ and the potential severity of loss is _______________.

PRIMA is a risk management association for people involved in public sector risk management.

Which of the following pools would be the WORST subject for a fully-funded self-insurance arrangement?

It is important for a retail store to quickly resume operations after a direct loss primarily because

The risk manager is concerned primarily with the management of

When faced with a risk of loss that is low frequency-high severity in nature,a prudent risk manager would choose which of the following methods for handling the loss exposure?

Which of the following statements about liability losses is true?

Which of the following pools would be the BEST subject for a fully-funded self-insurance arrangement?

Which of the following is an appropriate method for calculating the financial impact on the firm that results from the loss of a key employee?

Which of the following would not normally be identified in the risk management process?

Which tool or tools is/are used by most individuals for handling the loss exposure of physical damage to their vehicles caused by collisions? i. Avoidance II. Control III. Retention IV. Insurance

Installing a burglar alarm is an example of which one of the following:

All of the following are ways of managing risk mentioned in the text except:

All of the following are examples of loss reduction except:

The damage caused by an indirect loss can be greater in amount than the damage caused by direct loss in the same occurrence.

From the standpoint of the insured,deductibles in insurance contracts are a form of:

Loss prevention activities,if successful,may increase risk (uncertainty).

Fire sprinklers are an example of loss reduction.

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

Insurance is the best risk management tool when the chance of loss is _ and the loss severity is _____.

Risk assumption is the best risk management choice when the chance of loss is _ and the potential severity of loss is _____.