Question 1

Loss reduction and loss prevention are not the same thing.

Accepted Answer

A) True 
 B)False  True

Question 2

Loss exposures which are both high-frequency and high-severity in nature are best handled by assumption.

Accepted Answer

A) True 
 B)False  False

Question 3

Hurricane Katrina's losses overwhelmed many risk managers because they had not planned:

Accepted Answer

A) for any type of disaster 
B) on resuming operations somewhere other than their original location 
C) on any significant property losses 
D) for a hurricane 
A) for any type of disaster 
B) on resuming operations somewhere other than their original location 
C) on any significant property losses 
D) for a hurricane B

Question 4

Risk retention is not a good idea if:

Accepted Answer

A) the risk is unimportant 
B) you did not identify the risk 
C) the frequency is so low it almost will never happen 
D) the exposure is potentially catastrophic 
A) the risk is unimportant 
B) you did not identify the risk 
C) the frequency is so low it almost will never happen 
D) the exposure is potentially catastrophic

Question 5

59 Describe the steps in the pre loss risk management process.

Accepted Answer

The steps in the pre loss risk managemen

Question 6

Loss prevention and control:

Accepted Answer

A) eliminate risk 
B) are an alternative to self insurance 
C) reduce the probability and severity of loss 
D) directly minimize the probability of a natural disaster occurring 
A) eliminate risk 
B) are an alternative to self insurance 
C) reduce the probability and severity of loss 
D) directly minimize the probability of a natural disaster occurring

Question 7

Taking a defensive driving course is an example of which one of the following:

Accepted Answer

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

Question 8

Assume you own a fireworks manufacturing plant. A prospective insurer indicates it will not insure your property unless you take some loss prevention measures. Which of the following is the best lost prevention measure?

Accepted Answer

A) maintain your own fire department 
B) create two identical facilities, each having half the capacity of the original building 
C) do not mix ingredients until the last possible moment 
D) put smoke alarms and fire sprinklers in each building 
A) maintain your own fire department 
B) create two identical facilities, each having half the capacity of the original building 
C) do not mix ingredients until the last possible moment 
D) put smoke alarms and fire sprinklers in each building

Question 9

When the chance of loss is great and the potential loss severity is also very high,insurance is the best approach to the risk management problem.

Accepted Answer

A) True 
 B)False

Question 10

A captive insurance company:

Accepted Answer

A) only provides loss control services 
B) typically sells auto insurance to the public using independent agents 
C) provides a mechanism for self insurance 
D) only uses attorneys in fact 
A) only provides loss control services 
B) typically sells auto insurance to the public using independent agents 
C) provides a mechanism for self insurance 
D) only uses attorneys in fact

Question 11

If you were the risk manager of the World Trade Center buildings,what loss prevention or reduction technique could you have implemented before the 9/11/01 tragedy that might have made a significant difference in the number of lives lost?

Accepted Answer

A) Guards on the roof of each building 
B) Evacuation procedures that required everyone to leave after any sign of loss 
C) Stronger exterior building materials 
D) Better background screening of all who were allowed to work in the building 
A) Guards on the roof of each building 
B) Evacuation procedures that required everyone to leave after any sign of loss 
C) Stronger exterior building materials 
D) Better background screening of all who were allowed to work in the building

Question 12

In making your personal risk management decisions,which method would be the most feasible and the most economical for handling chipped windshields on your automobile?

Accepted Answer

A) Avoid (don't drive) 
B) Retain (pay for them yourself) 
C) Insure (file a claim under your auto insurance) 
D) Expose (remove your windshield from your car) 
A) Avoid (don't drive) 
B) Retain (pay for them yourself) 
C) Insure (file a claim under your auto insurance) 
D) Expose (remove your windshield from your car)

Question 13

Leasing is an example of risk assumption.

Accepted Answer

A) True 
 B)False

Question 14

Assume you own an antique car. Your prospective insurance company indicates they will not insure your car unless you take some loss prevention steps to avoid theft. Which of the following steps is the best loss PREVENTION measure with regard to theft?

Accepted Answer

A) store the car in a closed and locked garage 
B) always keep a canvas cover over the car 
C) never drive in rainy weather 
D) don't drive in heavy traffic 
A) store the car in a closed and locked garage 
B) always keep a canvas cover over the car 
C) never drive in rainy weather 
D) don't drive in heavy traffic

Question 15

Risk avoidance is the best risk management tool when the chance of loss is ______________ and the potential severity of loss __________________.

Accepted Answer

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

Question 16

Provide a statement of the overall goal of the risk management function.

Accepted Answer

The steps in the pre loss risk managemen

Question 17

The Big Boy Toy Company's best seller is a futuristic radio-controlled car. The toy is manufactured using a custom mold designed especially for the company by a local artist. If anything were to happen to this mold,the company would have to stop manufacturing the toys until the artist could reproduce the mold. The risk managers primary concern regarding damage to this mold is probably the:

Accepted Answer

A) indirect loss that will result while production of the toy is halted 
B) expense of paying the artist to reproduce the mold 
C) extra cost of manufacturing additional toys while the car cannot be manufactured 
D) direct damage to employees that will be laid off while production is halted 
A) indirect loss that will result while production of the toy is halted 
B) expense of paying the artist to reproduce the mold 
C) extra cost of manufacturing additional toys while the car cannot be manufactured 
D) direct damage to employees that will be laid off while production is halted

Question 18

To estimate potential property losses,risk managers must know:

Accepted Answer

A) the accounting book value of property 
B) the replacement cost of property 
C) the actual cash value of property 
D) the original purchase price of property 
A) the accounting book value of property 
B) the replacement cost of property 
C) the actual cash value of property 
D) the original purchase price of property

Question 19

A production bottleneck could be best identified by using:

Accepted Answer

A) interviews with line employees 
B) interview with upper management 
C) accounting statements 
D) flow chart 
A) interviews with line employees 
B) interview with upper management 
C) accounting statements 
D) flow chart

Question 20

Immediately after Hurricane Katrina,many risk managers did not have access to their back-up data because:

Accepted Answer

A) they stored the back-ups in the same building or in nearby buildings, and they could not gain access to those locations for weeks. 
B) they did not create back-up data in the first place. 
C) FEMA seized possession of all evidence of the hurricane's devastation, including back-up files. 
D) they stored the back-ups with Louisiana State Government's Back-Up Plan, and the building in which the files were located was destroyed in the hurricane. 
A) they stored the back-ups in the same building or in nearby buildings, and they could not gain access to those locations for weeks. 
B) they did not create back-up data in the first place. 
C) FEMA seized possession of all evidence of the hurricane's devastation, including back-up files. 
D) they stored the back-ups with Louisiana State Government's Back-Up Plan, and the building in which the files were located was destroyed in the hurricane.

Exam 3: Risk Management

Loss reduction and loss prevention are not the same thing.

Loss exposures which are both high-frequency and high-severity in nature are best handled by assumption.

Hurricane Katrina's losses overwhelmed many risk managers because they had not planned:

Risk retention is not a good idea if:

59 Describe the steps in the pre loss risk management process.

Loss prevention and control:

Taking a defensive driving course is an example of which one of the following:

Assume you own a fireworks manufacturing plant. A prospective insurer indicates it will not insure your property unless you take some loss prevention measures. Which of the following is the best lost prevention measure?

When the chance of loss is great and the potential loss severity is also very high,insurance is the best approach to the risk management problem.

A captive insurance company:

If you were the risk manager of the World Trade Center buildings,what loss prevention or reduction technique could you have implemented before the 9/11/01 tragedy that might have made a significant difference in the number of lives lost?

In making your personal risk management decisions,which method would be the most feasible and the most economical for handling chipped windshields on your automobile?

Leasing is an example of risk assumption.

Assume you own an antique car. Your prospective insurance company indicates they will not insure your car unless you take some loss prevention steps to avoid theft. Which of the following steps is the best loss PREVENTION measure with regard to theft?

Risk avoidance is the best risk management tool when the chance of loss is ______________ and the potential severity of loss __________________.

Provide a statement of the overall goal of the risk management function.

To estimate potential property losses,risk managers must know:

A production bottleneck could be best identified by using:

Immediately after Hurricane Katrina,many risk managers did not have access to their back-up data because:

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

Risk avoidance is the best risk management tool when the chance of loss is and the potential severity of loss ____.