Exam 3: Introduction to Risk Management

Low-frequency,low-severity loss exposures are best handled by

The worst loss that could ever happen to a firm is referred to as the

Brenda identified all of the pure loss exposures her family faces.Then she analyzed these loss exposures,developed a plan to treat these risks,and implemented the plan.The process Brenda conducted is called

Which of the following statements about the use of deductibles is (are)true? I.They represent risk retention by insurance purchasers. II.They tend to increase the cost of adjusting small claims.

A useful measure for an organization is the total of the organization's expenditures for treating loss exposures including retained losses,loss control expenses,insurance premiums,and other related expenses.This measure is called the organization's

All of the following are potential advantages of retention EXCEPT

Which of the following types of loss exposures may be appropriately handled through the purchase of insurance? I.High-frequency,low-severity II.Low-frequency,high-severity

Which of the following statements concerning the selection of risk management techniques and insurance market conditions is true? I.It's easier to purchase affordable insurance during a "soft " market than during a "hard" market. II.Retention is used more during a "soft" market than during a "hard" market.

Acme Company has three identical manufacturing plants,one on the Texas Gulf Coast,one in southern Alabama,and one in Florida.Each plant is valued at $50 million.Acme's risk manager is concerned about the damage which could be caused by a single hurricane.The risk manager believes there is an extremely low probability that a single hurricane could destroy two or all three plants because they are located so far apart.What is the maximum possible loss associated with a single hurricane?