Question 1

An enterprise risk management (ERM) program has a goal of defining which risks the program will manage.

Accepted Answer

A) True 
 B)False

Question 2

Explain the benefits of workers' compensation. Who is required to carry this type of insurance?

Accepted Answer

Workers' compensation insurance guarante

Question 3

Which of the following is a goal of enterprise risk management?

Accepted Answer

A)  defining which risks the program will manage 
B)  deciding how to petition the government for financial help 
C)  assigning risk management to a lobbyist in Washington 
D)  refining the business plan for risk management 
A)  defining which risks the program will manage 
B)  deciding how to petition the government for financial help 
C)  assigning risk management to a lobbyist in Washington 
D)  refining the business plan for risk management

Question 4

A characteristic of a health savings account that distinguishes it from other types of health care coverage is that it

Accepted Answer

A)  is not tax-deferred. 
B)  allows people to save money for medical expenses in a tax-deferred account. 
C)  covers only emergency procedures. 
D)  provides unlimited access to routine medical services (such as office visits) and minor medical tests and procedures (such as blood tests and X-rays) at no cost. 
A)  is not tax-deferred. 
B)  allows people to save money for medical expenses in a tax-deferred account. 
C)  covers only emergency procedures. 
D)  provides unlimited access to routine medical services (such as office visits) and minor medical tests and procedures (such as blood tests and X-rays) at no cost.

Question 5

Property insurance covers losses from fires, accidents, or theft.

Accepted Answer

A) True 
 B)False

Question 6

Apple has an insurable interest in the lives of its top executives.

Accepted Answer

A) True 
 B)False

Question 7

The Pension Benefit Guaranty Corporation provides retirement benefits, life insurance, health insurance, and disability income insurance.

Accepted Answer

A) True 
 B)False

Question 8

The ________ says that an insured person cannot collect more than the actual loss from an insurable risk.

Accepted Answer

A)  law of large numbers 
B)  rule of indemnity 
C)  law of diminishing returns 
D)  rule of finite loss coverage 
A)  law of large numbers 
B)  rule of indemnity 
C)  law of diminishing returns 
D)  rule of finite loss coverage

Question 9

The type of risk that is of most concern to businesspeople is speculative risk.

Accepted Answer

A) True 
 B)False

Question 10

Erin received a letter from her employer's insurance company inquiring if her children had health insurance coverage from another provider. According to the ________, the insurance provider has the right to this information.

Accepted Answer

A)  rule of 80 
B)  rule of indemnity 
C)  law of legal compliance 
D)  law of large numbers 
A)  rule of 80 
B)  rule of indemnity 
C)  law of legal compliance 
D)  law of large numbers

Question 11

Enterprise risk management is

Accepted Answer

A)  important to business. 
B)  irrelevant to business. 
C)  only used by nonprofit organizations. 
D)  only used by the Department of Homeland Security. 
A)  important to business. 
B)  irrelevant to business. 
C)  only used by nonprofit organizations. 
D)  only used by the Department of Homeland Security.

Question 12

An insurance company can use the law of large numbers to predict the number of people in your community that will have a car accident in a given month.

Accepted Answer

A) True 
 B)False

Question 13

Robert, owner and operator of a local nursing home, is designing an addition. Though, he realized that water sprinklers and smoke detectors were now required by state regulations, it was not a problem for him. His existing structure already had sprinklers and detectors because he felt that this was an effective strategy to

Accepted Answer

A)  self-insure against the risk of fire loss. 
B)  minimize the speculative risk of a fire. 
C)  reduce the risk of a fire loss. 
D)  avoid the risk of a fire loss. 
A)  self-insure against the risk of fire loss. 
B)  minimize the speculative risk of a fire. 
C)  reduce the risk of a fire loss. 
D)  avoid the risk of a fire loss.

Question 14

________ is a term that refers to the chance of loss, the degree of probability of loss, and the amount of possible loss.

Accepted Answer

A)  Speculation 
B)  Hazard 
C)  Insurability 
D)  Risk 
A)  Speculation 
B)  Hazard 
C)  Insurability 
D)  Risk

Question 15

The chance of a fire is an example of a pure risk.

Accepted Answer

A) True 
 B)False

Question 16

An example of an uninsurable risk would be the potential losses suffered by Patrick's Pizza Pies resulting from a popular new product from Paulie's Pizza Palace.

Accepted Answer

A) True 
 B)False

Question 17

SpeedyTime Delivery requires their drivers to wear seat belts as they operate their trucks. This is an example of self-insuring as a risk management strategy.

Accepted Answer

A) True 
 B)False

Question 18

The risk of environmental harm is ________ in its proportions on issues such as global warming.

Accepted Answer

A)  local 
B)  regional 
C)  national 
D)  international 
A)  local 
B)  regional 
C)  national 
D)  international

Question 19

According to the rule of indemnity, an insured person cannot collect more than the actual loss from an insurable risk.

Accepted Answer

A) True 
 B)False

Question 20

An endorsement can provide additional coverage to a homeowner's policy for business equipment.

Accepted Answer

A) True 
 B)False

Exam 23: Managing Risk

An enterprise risk management (ERM) program has a goal of defining which risks the program will manage.

Explain the benefits of workers' compensation. Who is required to carry this type of insurance?

Which of the following is a goal of enterprise risk management?

A characteristic of a health savings account that distinguishes it from other types of health care coverage is that it

Property insurance covers losses from fires, accidents, or theft.

Apple has an insurable interest in the lives of its top executives.

The Pension Benefit Guaranty Corporation provides retirement benefits, life insurance, health insurance, and disability income insurance.

The ________ says that an insured person cannot collect more than the actual loss from an insurable risk.

The type of risk that is of most concern to businesspeople is speculative risk.

Erin received a letter from her employer's insurance company inquiring if her children had health insurance coverage from another provider. According to the ________, the insurance provider has the right to this information.

Enterprise risk management is

An insurance company can use the law of large numbers to predict the number of people in your community that will have a car accident in a given month.

________ is a term that refers to the chance of loss, the degree of probability of loss, and the amount of possible loss.

The chance of a fire is an example of a pure risk.

An example of an uninsurable risk would be the potential losses suffered by Patrick's Pizza Pies resulting from a popular new product from Paulie's Pizza Palace.

SpeedyTime Delivery requires their drivers to wear seat belts as they operate their trucks. This is an example of self-insuring as a risk management strategy.

The risk of environmental harm is ________ in its proportions on issues such as global warming.

According to the rule of indemnity, an insured person cannot collect more than the actual loss from an insurable risk.

An endorsement can provide additional coverage to a homeowner's policy for business equipment.

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding Economics and How It Affects Business

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

How to Form a Business

Entrepreneurship and Starting a Small Business

Management and Leadership

Structuring Organizations for Todays Challenges

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employeemanagement Issues

Marketing: Helping Buyers Buy

Developing and Pricing Goods and Services

Distributing Products

Using Effective Promotions

Understanding Accounting and Financial Information

Financial Management

Using Securities Markets for Financing and Investing Opportunities

Money, Financial Institutions, and the Federal Reserve

Working Within the Legal Environment

Using Technology to Manage Information

Managing Personal Finances

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