Question 1

A firm's data warehousing of risk data allows decision makers to evaluate multiple dimensions of risks, but not overall risk.

Accepted Answer

A) True 
 B)False  False

Question 2

_____ involves projecting the frequency and severity of losses into the future based on current data and statistical assumptions.

Accepted Answer

Forecasting

Question 3

Risks cannot be segregated-they interact and affect one another.

Accepted Answer

A) True 
 B)False  True

Question 4

Once they are evaluated and forecasted, loss frequency and loss severity are used as the vertical and horizontal lines in the _____ for one specific risk exposure.

Accepted Answer

risk manag

Question 5

In our technological and information age, every person involved in finding solutions to lower the adverse impact of risks uses _____, which are data bases that provide information with which to compute the frequency and severity, explore difficult-to-identify risks, and provide forecasts and cost-benefits analyses.

Accepted Answer

risk manag

Question 6

When we focus on only one risk, we work with the risk management matrix.

Accepted Answer

A) True 
 B)False

Question 7

Identify the statement that explains the function of a cash flow analysis.

Accepted Answer

A) It looks at the amount of cash that will be saved and brings it into today's present value. 
B) It is used to inform a firm's planning activities particularly around decision of purchases of capital equipment. 
C) It enables the actual financial operation of the business to be measured against the forecast. 
D) It provides a forecast of revenues and expenditures. 
E) It focuses on identifying the changes to an organization that are required for it to achieve strategic goals. 
A) It looks at the amount of cash that will be saved and brings it into today's present value. 
B) It is used to inform a firm's planning activities particularly around decision of purchases of capital equipment. 
C) It enables the actual financial operation of the business to be measured against the forecast. 
D) It provides a forecast of revenues and expenditures. 
E) It focuses on identifying the changes to an organization that are required for it to achieve strategic goals.

Question 8

Because a sole proprietorship is a separate legal entity, investors who wish to limit possible losses connected with a particular venture may create a sole proprietorship and transfer such risks to it.

Accepted Answer

A) True 
 B)False

Question 9

Loss reduction efforts seek to reduce the probability of a loss occurring.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is an example of operational risk?

Accepted Answer

A) Foreign exchange risk 
B) Intellectual property risk 
C) Workers' compensation risk 
D) Interest rate risk 
E) Product liability risk 
A) Foreign exchange risk 
B) Intellectual property risk 
C) Workers' compensation risk 
D) Interest rate risk 
E) Product liability risk

Question 11

A(n) _____ analysis looks at the amount of cash that will be saved and brings it into today's present value.

Accepted Answer

The answer of A(n) _____ analysis looks at the amount...

Question 12

Explain the difference between loss prevention and loss reduction strategies with an example.

Accepted Answer

Loss prevention efforts seek to reduce t

Question 13

Risk management _____ are the primary tools to communicate risk management objectives.

Accepted Answer

The answer of Risk management _____ are the primary tools...

Question 14

Summarize the functions of a CRO in a firm.

Accepted Answer

The traditional risk manager's role has

Question 15

Risk solutions are only as good as their underlying assumptions.

Accepted Answer

A) True 
 B)False

Question 16

Write a short note on risk management information system.

Accepted Answer

Risk managers rely upon data and analysi

Question 17

In a small company or sole proprietorship, the owner usually hires one experienced risk manager to perform the risk management function.

Accepted Answer

A) True 
 B)False

Question 18

A(n) _____ provides risk managers with the ability to slice and dice the data in any way that may help risk managers assess and evaluate the risks their companies face.

Accepted Answer

risk manag

Question 19

According to the risk management matrix, risk exposures with low frequency of losses and low severity of losses are:

Accepted Answer

A) retained. 
B) transferred. 
C) avoided. 
D) ignored. 
E) retained with loss control. 
A) retained. 
B) transferred. 
C) avoided. 
D) ignored. 
E) retained with loss control.

Question 20

Which of the following provides fundamental possible solutions to risks with high and low severity and frequency?

Accepted Answer

A) Risk map 
B) Forced matrix 
C) Risk profile 
D) Kernel's risk matrix 
E) Risk management matrix 
A) Risk map 
B) Forced matrix 
C) Risk profile 
D) Kernel's risk matrix 
E) Risk management matrix

Exam 4: Evolving Risk Management: Fundamental Tools

A firm's data warehousing of risk data allows decision makers to evaluate multiple dimensions of risks, but not overall risk.

_____ involves projecting the frequency and severity of losses into the future based on current data and statistical assumptions.

Risks cannot be segregated-they interact and affect one another.

Once they are evaluated and forecasted, loss frequency and loss severity are used as the vertical and horizontal lines in the _____ for one specific risk exposure.

When we focus on only one risk, we work with the risk management matrix.

Identify the statement that explains the function of a cash flow analysis.

Because a sole proprietorship is a separate legal entity, investors who wish to limit possible losses connected with a particular venture may create a sole proprietorship and transfer such risks to it.

Loss reduction efforts seek to reduce the probability of a loss occurring.

Which of the following is an example of operational risk?

A(n) _____ analysis looks at the amount of cash that will be saved and brings it into today's present value.

Explain the difference between loss prevention and loss reduction strategies with an example.

Risk management _____ are the primary tools to communicate risk management objectives.

Summarize the functions of a CRO in a firm.

Risk solutions are only as good as their underlying assumptions.

Write a short note on risk management information system.

In a small company or sole proprietorship, the owner usually hires one experienced risk manager to perform the risk management function.

A(n) _____ provides risk managers with the ability to slice and dice the data in any way that may help risk managers assess and evaluate the risks their companies face.

According to the risk management matrix, risk exposures with low frequency of losses and low severity of losses are:

Which of the following provides fundamental possible solutions to risks with high and low severity and frequency?

The Nature of Risk: Losses and Opportunities

Risk Measurement and Metrics

Risk Attitudes: Expected Utility Theory and Demand for Hedging

The Evolution of Risk Management: Enterprise Risk Management

The Insurance Solution and Institutions

Insurance Operations

Insurance Markets and Regulation

Fundamental Doctrines Affecting Insurance Contracts

Structure and Analysis of Insurance Contracts

Property Risk Management

The Liability Risk Management

Multirisk Management Contracts: Homeowners

Multirisk Management Contracts: Auto

Multirisk Management Contracts: Business

Risks Related to the Job: Workers Compensation and Unemployment Compensation

Life Cycle Financial Risks

Social Security

Mortality Risk Management: Individual Life Insurance and Group Life Insurance

Employment-Based Risk Management General

Employment-Based and Individual Longevity Risk Management

Employment and Individual Health Risk Management

Filters