Question 1

Which one of the following lists presents the three major categories of "legal liability"?

Accepted Answer

A)  Breach of contract, res ipsa loquitor, torts 
B)  Criminal wrongs, product liability, intentional interference 
C)  Torts, breach of contracts, liability without fault 
D)  Breach of contracts, torts, criminal wrongs 
A)  Breach of contract, res ipsa loquitor, torts 
B)  Criminal wrongs, product liability, intentional interference 
C)  Torts, breach of contracts, liability without fault 
D)  Breach of contracts, torts, criminal wrongs D

Question 2

A person can be found negligent even though his failure to perform some act was unintentional.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following statements about liability losses is true?

Accepted Answer

A)  They arise from two sources: the obligation to pay legal damages, and the resulting bad publicity. 
B)  The obligation to pay legal damages is always more expensive than the cost of defense. 
C)  Defense costs can be expensive, unless the court finds that the plaintiff's claims are groundless. 
D)  None of the above is true. 
A)  They arise from two sources: the obligation to pay legal damages, and the resulting bad publicity. 
B)  The obligation to pay legal damages is always more expensive than the cost of defense. 
C)  Defense costs can be expensive, unless the court finds that the plaintiff's claims are groundless. 
D)  None of the above is true. D

Question 4

Risk identification:

Accepted Answer

A)  is something completely different from loss identification 
B)  is only relevant for firms making products that have moving parts 
C)  can lead to financial loss 
D)  is also called loss identification in the insurance industry 
A)  is something completely different from loss identification 
B)  is only relevant for firms making products that have moving parts 
C)  can lead to financial loss 
D)  is also called loss identification in the insurance industry

Question 5

All external losses are random.

Accepted Answer

A) True 
 B)False

Question 6

A plaintiff will generally collect for negligence when all the following characteristics are present except:

Accepted Answer

A)  injury is suffered by the plaintiff 
B)  plaintiff breaches a contract with the defendant 
C)  breach of duty owed the plaintiff 
D)  the breach of the duty caused the injury to the plaintiff 
A)  injury is suffered by the plaintiff 
B)  plaintiff breaches a contract with the defendant 
C)  breach of duty owed the plaintiff 
D)  the breach of the duty caused the injury to the plaintiff

Question 7

Which of the following is true about pure risks?

Accepted Answer

A)  They are also known as hazard risks. 
B)  They are completely unrelated to hazard risks. 
C)  Are only recently being considered by risk managers. 
D)  Consist of Property and associated Human Resource risk only. 
A)  They are also known as hazard risks. 
B)  They are completely unrelated to hazard risks. 
C)  Are only recently being considered by risk managers. 
D)  Consist of Property and associated Human Resource risk only.

Question 8

Which of the following is true about internal risks?

Accepted Answer

A)  They deal with issues related to the operations of the firm. 
B)  They are harder to manage than external risks. 
C)  They are beyond the control of the risk manager. 
D)  They are more costly than external risks. 
A)  They deal with issues related to the operations of the firm. 
B)  They are harder to manage than external risks. 
C)  They are beyond the control of the risk manager. 
D)  They are more costly than external risks.

Question 9

Workers' compensation covers all of the following losses except:

Accepted Answer

A)  medical expenses resulting from a job related injury 
B)  rehabilitation expenses resulting from a job related injury 
C)  lost wages during a disability that results from job related injuries 
D)  medical expenses resulting from an at-home accident 
A)  medical expenses resulting from a job related injury 
B)  rehabilitation expenses resulting from a job related injury 
C)  lost wages during a disability that results from job related injuries 
D)  medical expenses resulting from an at-home accident

Question 10

Risk avoidance and loss prevention are the same thing.

Accepted Answer

A) True 
 B)False

Question 11

Provide a statement of the overall goal of the risk management function.

Accepted Answer

The overall goal of the risk management

Question 12

Which of the following is true about indirect losses?

Accepted Answer

A)  A lawsuit is a good example of an indirect loss. 
B)  They can have a spill-over effect to other product lines. 
C)  They are only a result of significant property losses. 
D)  Indirect losses are irrelevant compared to direct losses. 
A)  A lawsuit is a good example of an indirect loss. 
B)  They can have a spill-over effect to other product lines. 
C)  They are only a result of significant property losses. 
D)  Indirect losses are irrelevant compared to direct losses.

Question 13

Given a broad definition of legal liability, what are the three legal categories for describing situations in which one person injures another? Which ones are generally insurable?

Accepted Answer

The three categories are: torts (a civil

Question 14

Which of the following is true about the relationship between direct and indirect losses?

Accepted Answer

A)  The impact of indirect losses can be much bigger than the original direct loss. 
B)  They are unrelated events. 
C)  Direct losses are the result of an indirect loss due to business interruption. 
D)  Indirect losses are irrelevant compared to direct losses. 
A)  The impact of indirect losses can be much bigger than the original direct loss. 
B)  They are unrelated events. 
C)  Direct losses are the result of an indirect loss due to business interruption. 
D)  Indirect losses are irrelevant compared to direct losses.

Question 15

Property Risk:

Accepted Answer

A)  is an example of a speculative risk 
B)  is an example of an indirect risk 
C)  only relates to buildings 
D)  is an example of a pure risk 
A)  is an example of a speculative risk 
B)  is an example of an indirect risk 
C)  only relates to buildings 
D)  is an example of a pure risk

Question 16

All of the following are considered a financial risk handled by financial risk management except:

Accepted Answer

A)  currency risk 
B)  liquidity risk 
C)  product marketability risk 
D)  commodity price risk 
A)  currency risk 
B)  liquidity risk 
C)  product marketability risk 
D)  commodity price risk

Question 17

It is important for a retail store to quickly resume operations after a direct loss primarily because:

Accepted Answer

A)  looting will occur 
B)  retail merchandise goes out of style quickly 
C)  most property insurance contracts demand that operations resume immediately, or as soon as possible, after a direct loss 
D)  customers can be quickly and permanently lost if operations do not continue 
A)  looting will occur 
B)  retail merchandise goes out of style quickly 
C)  most property insurance contracts demand that operations resume immediately, or as soon as possible, after a direct loss 
D)  customers can be quickly and permanently lost if operations do not continue

Question 18

In making your personal risk management decisions, which method would be the most feasible and the most economical for handling chipped windshields on your automobile?

Accepted Answer

A)  Avoid (don't drive) 
B)  Retain (pay for them yourself) 
C)  Insure (file a claim under your auto insurance) 
D)  Expose (remove your windshield from your car) 
A)  Avoid (don't drive) 
B)  Retain (pay for them yourself) 
C)  Insure (file a claim under your auto insurance) 
D)  Expose (remove your windshield from your car)

Question 19

The "reasonable person" standard changes based upon which one of the following factors?

Accepted Answer

A)  The extent and dollar amount of the injury that occurs 
B)  The defendant's professional status relative to the event causing the injury 
C)  The defendant's criminal record 
D)  The insurer's duty to defend the policyholder 
A)  The extent and dollar amount of the injury that occurs 
B)  The defendant's professional status relative to the event causing the injury 
C)  The defendant's criminal record 
D)  The insurer's duty to defend the policyholder

Question 20

What are the requirements for a plaintiff to prove negligence against a defendant?

Accepted Answer

The plaintiff must show 1) the defendant

Exam 2: Risk Identification

Which one of the following lists presents the three major categories of "legal liability"?

A person can be found negligent even though his failure to perform some act was unintentional.

Which of the following statements about liability losses is true?

Risk identification:

All external losses are random.

A plaintiff will generally collect for negligence when all the following characteristics are present except:

Which of the following is true about pure risks?

Which of the following is true about internal risks?

Workers' compensation covers all of the following losses except:

Risk avoidance and loss prevention are the same thing.

Provide a statement of the overall goal of the risk management function.

Which of the following is true about indirect losses?

Given a broad definition of legal liability, what are the three legal categories for describing situations in which one person injures another? Which ones are generally insurable?

Which of the following is true about the relationship between direct and indirect losses?

Property Risk:

All of the following are considered a financial risk handled by financial risk management except:

It is important for a retail store to quickly resume operations after a direct loss primarily because:

In making your personal risk management decisions, which method would be the most feasible and the most economical for handling chipped windshields on your automobile?

The "reasonable person" standard changes based upon which one of the following factors?

What are the requirements for a plaintiff to prove negligence against a defendant?

Introduction to Enterprise Risk Management and Insurance

Risk Assessment and Pooling

Risk-Handling Techniques: Loss Control, Risk Transfer, and Loss Financing

Risk-Handling Techniques: Diversification and Hedging

Fundamentals of Insurance

Insurable Perils and Insuring Organizations

Insurance Functions

Insurance Markets: Economics and Issues

Insurance Regulation

Insurance Contracts

The Personal Auto Policy

Homeowners Insurance

Professional Financial Planning

Life Insurance Policies

Standard Life Insurance Contract Provisions and Options

Annuities

Health Insurance and Disability Income

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

Commercial Property Insurance

Commercial Liability Insurance

Filters