Question 1

Holistic risk mapping is the outcome of risk profiling.

Accepted Answer

A) True 
 B)False

Question 2

What of the following statements is true about risk assumption?

Accepted Answer

A) Retention is especially attractive to small organizations. 
B) Many large corporations use captives, which are a form of reinsurance, to transfer their risk. 
C) When a business creates a subsidiary to handle the risk exposures, the business creates a captive. 
D) A captive firm is independent of its parent company. 
E) When an organization uses a highly formalized method of retention of a risk, it is said the organization has reinsured the risk. 
A) Retention is especially attractive to small organizations. 
B) Many large corporations use captives, which are a form of reinsurance, to transfer their risk. 
C) When a business creates a subsidiary to handle the risk exposures, the business creates a captive. 
D) A captive firm is independent of its parent company. 
E) When an organization uses a highly formalized method of retention of a risk, it is said the organization has reinsured the risk.

Question 3

When a business creates a subsidiary to handle the risk exposures, the business creates a captive.

Accepted Answer

A) True 
 B)False

Question 4

_____ regression attempts to explain the relationship among observed values by applying a straight line fit to the data.

Accepted Answer

The answer of _____ regression attempts to explain the relationship...

Question 5

Risk managers avoid risks that have:

Accepted Answer

A) low frequency and low severity of losses. 
B) high frequency and high severity of losses. 
C) low frequency and high severity of losses. 
D) high frequency and low severity of losses. 
E) been insured or reinsured. 
A) low frequency and low severity of losses. 
B) high frequency and high severity of losses. 
C) low frequency and high severity of losses. 
D) high frequency and low severity of losses. 
E) been insured or reinsured.

Question 6

Which of the following is a system of housing large sets of data for strategic analysis and operations?

Accepted Answer

A) Data mining 
B) Data integration 
C) Data warehousing 
D) Data modeling 
E) Data processing 
A) Data mining 
B) Data integration 
C) Data warehousing 
D) Data modeling 
E) Data processing

Question 7

The first step in mapping risk is to identify the firm's loss exposures and estimate and forecast the frequency and severity of each potential risk.

Accepted Answer

A) True 
 B)False

Question 8

You are plotting intersection points between measures of frequency (on an x-axis) and severity (on a y-axis) and visually plotting intersection points.Each point represents the relationship between the frequency of the exposure and the severity of the exposure for each risk measured.What are you preparing?

Accepted Answer

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

Question 9

Typically, the traditional risk management position has reported to the _____.

Accepted Answer

The answer of Typically, the traditional risk management position has...

Question 10

Risk management is a continuous process requiring constant monitoring of the program.

Accepted Answer

A) True 
 B)False

Question 11

Explain risk profiling and its importance in the risk management process.

Accepted Answer

Discovering all risks, their assessments

Question 12

The formation of a corporation with limited liability for its stockholders and contractual arrangements like insurance are strategies to:

Accepted Answer

A) transfer risk. 
B) avoid risk. 
C) retain risk. 
D) retain risk with loss control. 
E) assume risk. 
A) transfer risk. 
B) avoid risk. 
C) retain risk. 
D) retain risk with loss control. 
E) assume risk.

Question 13

Self-insuring is a _____ strategy.

Accepted Answer

A) risk avoidance 
B) risk transference 
C) risk reduction 
D) risk retention 
E) risk ignorance 
A) risk avoidance 
B) risk transference 
C) risk reduction 
D) risk retention 
E) risk ignorance

Question 14

In linear regression, the intercept is 7.2 and the slope is 0.64.Calculate the number of claims in projected year 7.

Accepted Answer

A) 7.84 
B) 14.84 
C) 11.68 
D) 51.04 
E) 11.608 
A) 7.84 
B) 14.84 
C) 11.68 
D) 51.04 
E) 11.608

Question 15

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

Accepted Answer

A) retained or self-insured. 
B) transferred or insured. 
C) avoided. 
D) ignored. 
E) retained with loss control. 
A) retained or self-insured. 
B) transferred or insured. 
C) avoided. 
D) ignored. 
E) retained with loss control.

Question 16

Glasgow Tech.is a highly leveraged corporation.What does this mean?

Accepted Answer

A) Glasgow Corporation has numerous risk exposures due to operations all over the world. 
B) Glasgow Corporation has taken many loans to finance its operations. 
C) Glasgow Corporation has a very high P/E ratio. 
D) Glasgow Corporation has to receive huge amounts of money they owe (accounts receivables). 
E) Glasgow Corporation has financed its operations by itself and has not taken any loans. 
A) Glasgow Corporation has numerous risk exposures due to operations all over the world. 
B) Glasgow Corporation has taken many loans to finance its operations. 
C) Glasgow Corporation has a very high P/E ratio. 
D) Glasgow Corporation has to receive huge amounts of money they owe (accounts receivables). 
E) Glasgow Corporation has financed its operations by itself and has not taken any loans.

Question 17

While preparing a risk map, risks like earthquake, tornado, mold exposure, and terrorism would usually:

Accepted Answer

A) fall into the low-frequency/high-severity quadrant. 
B) fall into the high-frequency/high-severity quadrant. 
C) fall into the low-frequency/low-severity quadrant. 
D) fall into the high-frequency/low-severity quadrant. 
E) be excluded because they usually cannot be insured and have to be retained. 
A) fall into the low-frequency/high-severity quadrant. 
B) fall into the high-frequency/high-severity quadrant. 
C) fall into the low-frequency/low-severity quadrant. 
D) fall into the high-frequency/low-severity quadrant. 
E) be excluded because they usually cannot be insured and have to be retained.

Question 18

Risk mapping involves charting individual risk "silos" from each separate business unit.

Accepted Answer

A) True 
 B)False

Question 19

A(n) _____ insurance company is one that provides risk management protection to its parent company and other affiliated organizations.

Accepted Answer

The answer of A(n) _____ insurance company is one that...

Question 20

Identify the risks arising from changing market conditions involving prices, volatility, liquidity, and foreign exchange risk.

Accepted Answer

A) Household risks 
B) Business risks 
C) Operational risks 
D) Natural and man-made risks 
E) Financial risks 
A) Household risks 
B) Business risks 
C) Operational risks 
D) Natural and man-made risks 
E) Financial risks

Exam 4: Evolving Risk Management: Fundamental Tools

Holistic risk mapping is the outcome of risk profiling.

What of the following statements is true about risk assumption?

When a business creates a subsidiary to handle the risk exposures, the business creates a captive.

_____ regression attempts to explain the relationship among observed values by applying a straight line fit to the data.

Risk managers avoid risks that have:

Which of the following is a system of housing large sets of data for strategic analysis and operations?

The first step in mapping risk is to identify the firm's loss exposures and estimate and forecast the frequency and severity of each potential risk.

Typically, the traditional risk management position has reported to the _____.

Risk management is a continuous process requiring constant monitoring of the program.

Explain risk profiling and its importance in the risk management process.

The formation of a corporation with limited liability for its stockholders and contractual arrangements like insurance are strategies to:

Self-insuring is a _____ strategy.

In linear regression, the intercept is 7.2 and the slope is 0.64.Calculate the number of claims in projected year 7.

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

Glasgow Tech.is a highly leveraged corporation.What does this mean?

While preparing a risk map, risks like earthquake, tornado, mold exposure, and terrorism would usually:

Risk mapping involves charting individual risk "silos" from each separate business unit.

A(n) _____ insurance company is one that provides risk management protection to its parent company and other affiliated organizations.

Identify the risks arising from changing market conditions involving prices, volatility, liquidity, and foreign exchange risk.

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

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