Exam 23: Appendix: Managing Risk

________ risk involves a chance of either profit or loss.

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

Risk management is concerned only with risks to individuals and businesses.

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

Brad has decided to increase the size of his auto repair business, although he realizes that this decision brings added risk. This is an example of ________ risk.

________ insurance guarantees payment of wages, medical care, and rehabilitation services for employees who are injured on the job.

Sadly, during a war many civilians watch as everything they have is destroyed. Insurance companies will view this type of loss as

Arturo is worried about the risk of potential flooding to his restaurant. He decides to buy insurance to cover this ________ risk.

There have been a series of large judgments in product liability cases against companies producing hair dryers. If this trend continues, insurance companies will respond by ________ the premiums charged for liability insurance for hair dryer manufacturers.

The law of large numbers states that if a large number of people are exposed to the same risk, a predictable number of losses will occur during a given period of time.

Self-insurance makes more sense for firms that operate one large facility than it does for firms with facilities scattered all over the country.

New Dimensions Athletic Association was formed to administer youth soccer leagues and tournaments in a popular urban area. All board members recently resigned stating that they could no longer assume the risk of participating on a board that did not insure its volunteer members against serious player injuries and other unanticipated problems. Collectively, these members are

Water sprinklers and smoke detectors can be used to minimize speculative risks.

Aqua Sprinkler Systems experienced increasing sales for several years. The firm expanded its product offerings, and now serves both commercial and residential customers. Which of the following situations would be considered an uninsurable risk for Aqua Sprinkler Systems?

Bookworm sales have been down for the last year due to new competition from a national chain and Waata is understandably concerned. He recently called his insurance agent to see if this downturn in sales was covered by his business policy. The agent, Will B. Safe, told Waata

Health savings accounts are managed care plans that have a high deductible.

Companies adopt risk management procedures to minimize the chance of business failure due to unplanned events such as security breaches, terrorist attacks, and natural disasters.

Speculative risk involves a chance of either profit or loss.

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

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