Question 1

To lessen the impact of catastrophic losses,many insurers use all the following except:

Accepted Answer

A) contingent surplus notes 
B) catastrophe bonds 
C) forward purchase options 
D) exchange traded options 
A) contingent surplus notes 
B) catastrophe bonds 
C) forward purchase options 
D) exchange traded options C

Question 2

The responsibility for loss of goods being shipped internally can be determined by looking at the contract between the importer and exporter.

Accepted Answer

A) True 
 B)False  True

Question 3

Enterprise risk management is concerned with

Accepted Answer

A) both pure and speculative risks 
B) insurance contracts 
C) pure risks 
D) subjective risks 
A) both pure and speculative risks 
B) insurance contracts 
C) pure risks 
D) subjective risks A

Question 4

Market risk,as discussed in the section on financial risk management,occurs when products are not acceptable to the market.

Accepted Answer

A) True 
 B)False

Question 5

The term "over-insurance" includes purchasing a "low" deductible and purchasing higher than needed policy limits.

Accepted Answer

A) True 
 B)False

Question 6

Currency risk is risk associated with the fluctuation of currency values relative to another currency.

Accepted Answer

A) True 
 B)False

Question 7

Some U.S.insurers have local insurance operations in overseas markets.

Accepted Answer

A) True 
 B)False

Question 8

Consider the differences between international risk management and domestic risk management.Which one of the following would be the least important concern in the international risk management function?

Accepted Answer

A) the physical perils causing the losses 
B) the problem of foreign currency value fluctuations 
C) political risks, meaning the unexpected intervention by foreign governments 
D) the foreign risk financing and insurance arrangements 
A) the physical perils causing the losses 
B) the problem of foreign currency value fluctuations 
C) political risks, meaning the unexpected intervention by foreign governments 
D) the foreign risk financing and insurance arrangements

Question 9

Interest rate risk arises from changes in:

Accepted Answer

A) currency discount rates 
B) the value of fixed income securities because of changes in interest rates 
C) interest rates caused solely by inflation 
D) the value of currency relative to another currency 
A) currency discount rates 
B) the value of fixed income securities because of changes in interest rates 
C) interest rates caused solely by inflation 
D) the value of currency relative to another currency

Question 10

What are the generic tools used to deal with the exposures in the area of financial risk management?

Accepted Answer

The financial tools in financial risk ma

Question 11

Which of the following would be least important in making the retention/transfer decision?

Accepted Answer

A) tax implications 
B) social and ethical concerns 
C) historical management policy 
D) financial ability to pay losses 
A) tax implications 
B) social and ethical concerns 
C) historical management policy 
D) financial ability to pay losses

Question 12

Traditional risk management is primarily concerned with:

Accepted Answer

A) speculative risks 
B) insurance contracts 
C) pure risks 
D) subjective risks 
A) speculative risks 
B) insurance contracts 
C) pure risks 
D) subjective risks

Question 13

The difference in conditions (DIC)contract is designed to:

Accepted Answer

A) increase the policy limits on all liability coverages 
B) broaden the legal liability policy coverage to cover intentional acts of foreign employees 
C) increase the policy limits and lower deductibles of all property insurance contracts 
D) fill the gaps in perils in basic property insurance contracts 
A) increase the policy limits on all liability coverages 
B) broaden the legal liability policy coverage to cover intentional acts of foreign employees 
C) increase the policy limits and lower deductibles of all property insurance contracts 
D) fill the gaps in perils in basic property insurance contracts

Question 14

A traded option contract creates a legal right to buy or sell assets at a set price before a certain date.

Accepted Answer

A) True 
 B)False

Question 15

Open cargo marine contracts provide a fixed amount of coverage for all transported property on an annual basis,regardless of the amount shipped.

Accepted Answer

A) True 
 B)False

Question 16

An RMIS can communicate through national electronic bulletin boards and track OSHA bulletins.

Accepted Answer

A) True 
 B)False

Question 17

The main purpose of an RMIS is to record,track and analyze losses.

Accepted Answer

A) True 
 B)False

Question 18

What are the main considerations in determining the proper mix of retention and transfer in handling potential loss exposures?

Accepted Answer

The main considerations in making the tr

Question 19

To finance some uninsurable exposures,risk managers go to the "ART" market. What does ART stand for?

Accepted Answer

A) alternative risk management team 
B) alternative risk transfer 
C) actuarial risk transfer 
D) actuarial risk types 
A) alternative risk management team 
B) alternative risk transfer 
C) actuarial risk transfer 
D) actuarial risk types

Question 20

Which statement is true concerning the inclusion of risk in any retention/transfer decision?

Accepted Answer

A) the element of risk can be accurately included in the decision 
B) because risk is a function of a known distribution, there is no need to include it as a factor 
C) since the law of large numbers generally eliminates risk-making outcomes accurately predictable, risk is not a factor except in capital budgeting decisions 
D) because individuals have different risk preferences and attitudes, risk cannot be accurately and consistently factored into the model 
A) the element of risk can be accurately included in the decision 
B) because risk is a function of a known distribution, there is no need to include it as a factor 
C) since the law of large numbers generally eliminates risk-making outcomes accurately predictable, risk is not a factor except in capital budgeting decisions 
D) because individuals have different risk preferences and attitudes, risk cannot be accurately and consistently factored into the model

Exam 17: Advanced Topics in Risk Management

To lessen the impact of catastrophic losses,many insurers use all the following except:

The responsibility for loss of goods being shipped internally can be determined by looking at the contract between the importer and exporter.

Enterprise risk management is concerned with

Market risk,as discussed in the section on financial risk management,occurs when products are not acceptable to the market.

The term "over-insurance" includes purchasing a "low" deductible and purchasing higher than needed policy limits.

Currency risk is risk associated with the fluctuation of currency values relative to another currency.

Some U.S.insurers have local insurance operations in overseas markets.

Consider the differences between international risk management and domestic risk management.Which one of the following would be the least important concern in the international risk management function?

Interest rate risk arises from changes in:

What are the generic tools used to deal with the exposures in the area of financial risk management?

Which of the following would be least important in making the retention/transfer decision?

Traditional risk management is primarily concerned with:

The difference in conditions (DIC)contract is designed to:

A traded option contract creates a legal right to buy or sell assets at a set price before a certain date.

Open cargo marine contracts provide a fixed amount of coverage for all transported property on an annual basis,regardless of the amount shipped.

An RMIS can communicate through national electronic bulletin boards and track OSHA bulletins.

The main purpose of an RMIS is to record,track and analyze losses.

What are the main considerations in determining the proper mix of retention and transfer in handling potential loss exposures?

To finance some uninsurable exposures,risk managers go to the "ART" market. What does ART stand for?

Which statement is true concerning the inclusion of risk in any retention/transfer decision?

Fundamentals and Terminology

Defining the Insurable Event

Risk Management

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

Commercial Property Insurance

Commercial Liability Insurance

Bonding,Crime Insurance and Reinsurance

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

Filters