CPCU 500 Exam Questions- Managing Evolving Risks || || || || || || ||
with accurate detailed answers
|| || ||
Which one of the following statements about the use of drones is true? - ✔✔Drones may be
|| || || || || || || || || || || || || || || || ||
equipped with cameras that relay data in real-time
|| || || || || || ||
Which one of the following uses infrared light to detect nearby objects? - ✔✔Lidar
|| || || || || || || || || || || || ||
AMRM Insurance Company sells insurance in Virginia, North Carolina, South Carolina,
|| || || || || || || || || || ||
and Georgia. The company has compiled a policyowner data base that can be used to send
|| || || || || || || || || || || || || || || ||
text messages when hurricanes approach. The company provides early warnings, storm
|| || || || || || || || || || ||
updates from the National Weather Service, and hurricane safety measures. The company
|| || || || || || || || || || || ||
credits the system with reduced hurricane claims. The use of the texting system is an
|| || || || || || || || || || || || || || ||
example of - ✔✔Preventive analytics
|| || || ||
Clear-Rite Company specializes in the clean-up of hazardous chemical spills. Workers
|| || || || || || || || || || ||
performing clean-up operations must use safety suits to prevent exposure to the chemicals.
|| || || || || || || || || || || || ||
The suits include pulse and respiration monitors, body temperature sensors, and chemical
|| || || || || || || || || || || ||
sensors. The monitors and sensors report data to a mobile operations center which is
|| || || || || || || || || || || || || ||
deployed to each clean-up site. The pulse and respiration monitors and the sensors that are
|| || || || || || || || || || || || || || ||
part of the protective gear are called - ✔✔Wearable technologies
|| || || || || || || || ||
The traditional definition of risk management reflects the traditional concept of risk as -
|| || || || || || || || || || || || || ||
✔✔Negative
WOTF is true regarding the evolution of risk and risk management? - ✔✔The definition of
|| || || || || || || || || || || || || || ||
risk has evolved to included +/- attributes
|| || || || || ||
,Many auto manufacturers have automated a portion of their assembly lines by introducing a
|| || || || || || || || || || || || ||
smart product. The smart product performs repetitive tasks, such as making the same weld
|| || || || || || || || || || || || || || ||
on each vehicle frame as it passes the smart product. These smart products, which can be
|| || || || || || || || || || || || || || || ||
fixed or mobile, reduce repetitive motion injuries that humans might suffer. They can also
|| || || || || || || || || || || || || ||
be used to perform dangerous tasks and in heavy-lifting jobs. These smart products are
|| || || || || || || || || || || || || ||
called - ✔✔Robots || ||
Which one of the following is described as a distributed database that serves as a
|| || || || || || || || || || || || || || ||
collectively shared ledger? - ✔✔Blockchain || || || ||
Autonomous Vehicle Applications (AVA) is a start-up company that develops safety || || || || || || || || || || ||
technologies that can be sold to companies that are producing autonomous vehicles. One || || || || || || || || || || || || ||
technology AVA is developing allows an autonomous vehicle to detect, extract, and analyze
|| || || || || || || || || || || || ||
images; and then to respond to the images. For example, the technology would detect a
|| || || || || || || || || || || || || || ||
presence in a crosswalk, extract the image, and a computer would analyze the image. When
|| || || || || || || || || || || || || || ||
the image was determined to be a human being, the vehicle would slow down or stop until
|| || || || || || || || || || || || || || || || ||
the crosswalk was clear. This technology, which is designed to capture and analyze images,
|| || || || || || || || || || || || || ||
and to act on the recognition of the image; is called - ✔✔Computer vision
|| || || || || || || || || || || || ||
Catastrophes such as recent earthquakes and the 2011 tsunami in Japan pointed out a need || || || || || || || || || || || || || || ||
for many organizations to evaluate and manage their - ✔✔Supply-chain risk
|| || || || || || || || || ||
Which one of the following best explains how most smart products potentially improve risk
|| || || || || || || || || || || || || ||
management? - ✔✔They generate big data to which advanced analytics can be applied || || || || || || || || || || || ||
Take Your Order (TYO) is a company that specializes in taking product orders for vendors.
|| || || || || || || || || || || || || || ||
The manufacturer of a product can run a television or internet ad for a product with a toll-
|| || || || || || || || || || || || || || || || ||
free number. Customer calls for the products are routed to TYO, where one hundred
|| || || || || || || || || || || || || ||
operators are available to receive the calls. Each operator is assigned a cubicle with a
|| || || || || || || || || || || || || || ||
computer terminal, video display monitor, and a telephone. TYO experienced high workers
|| || || || || || || || || || || ||
compensation claims from its operators, claiming neck strain, eye strain, and wrist pain. In || || || || || || || || || || || || || ||
an effort to reduce such injuries, TYO evaluated each operator's work area. The height of
|| || || || || || || || || || || || || || ||
chairs and video monitors were adjusted, curved computer keyboards and wrist-rests were
|| || || || || || || || || || || ||
,provided, and the telephones were replaced with audio headsets. Workers compensation
|| || || || || || || || || || ||
costs dropped significantly. The science of designing work spaces based on interaction
|| || || || || || || || || || || ||
between people and the equipment in the work s - ✔✔Ergonomics
|| || || || || || || || || ||
Don is the Risk Manager for Rafferty Corporation. One of his peers, Sally, asks him one day,
|| || || || || || || || || || || || || || || || ||
"How do you define risk?" When Don replies, which one of the following statements is
|| || || || || || || || || || || || || || ||
accurate? - ✔✔Risk has different meanings within the risk management and insurance
|| || || || || || || || || || || ||
communities.
In an effort to reduce expenses, increase profitability, and reduce human errors; ABC
|| || || || || || || || || || || || ||
Insurance Company decided to automate most of its personal lines underwriting function.
|| || || || || || || || || || || ||
The company now uses standardized application forms that are submitted electronically to
|| || || || || || || || || || || ||
one of the company's regional offices. At each regional office, a computer with a scanner
|| || || || || || || || || || || || || || ||
reads the applications. The computer has been programmed with acceptable answers to the
|| || || || || || || || || || || || ||
questions. If the answers on the application are all acceptable, the policy is automatically
|| || || || || || || || || || || || || ||
issued. Rejected applications are automatically forwarded to a human underwriter who
|| || || || || || || || || || ||
reviews them. The use of this technology has reduced the company's expense ratio by two
|| || || || || || || || || || || || || || ||
and a half percent, and reduced the time it takes to issue a policy. ABC Insurance
|| || || || || || || || || || || || || || || ||
Company's use of computers to evaluate applications electronically is an application of -
|| || || || || || || || || || || || ||
✔✔Artificial intelligence ||
A municipal water plant installed water flow sensors and water pressure sensors on the
|| || || || || || || || || || || || || ||
water pipes leaving the plant. The sensors make sure water is flowing properly and that
|| || || || || || || || || || || || || || ||
there are no leaks or clogs which could produce a loss. These types of sensors are -
|| || || || || || || || || || || || || || || || ||
✔✔Mechanical sensors ||
Which one of the following is a tool that can be used by fraud investigators to compare
|| || || || || || || || || || || || || || || || ||
documents and analyze notes? - ✔✔Text mining || || || || || ||
Last year, three Metro City firemen died responding to a fire at a chemical plant, when they
|| || || || || || || || || || || || || || || || ||
were overcome by toxic fumes. In response, Metro City is purchasing advanced first
|| || || || || || || || || || || || ||
responder gear. It includes special flame retardant suits with chemical and explosive fume
|| || || || || || || || || || || || ||
sensors, air quality sensors, and heat sensors. Responders will also wear special watches
|| || || || || || || || || || || || ||
, that will track a responder's pulse, respiration, and blood pressure; and helmets that include
|| || || || || || || || || || || || ||
video cameras. All of these sensors will feed data to a computer in real-time. The computer
|| || || || || || || || || || || || || || || || ||
will analyze the data and issue threat levels and evacuation orders, if necessary. The
|| || || || || || || || || || || || || ||
protective gear Metro City will purchase and the data transmission and analysis capability
|| || || || || || || || || || || || ||
illustrate the use of - ✔✔Smart products || || || || || ||
Precision Electronic Components manufactures circuit boards, microchips, and other
|| || || || || || || || ||
electronic products. Given the precision necessary for their products, the manufacturing
|| || || || || || || || || || ||
environment must be controlled. Temperature, humidity, static electricity and other factors || || || || || || || || || || ||
must be monitored. After losing several batches of products due to human monitoring
|| || || || || || || || || || || || ||
failures and imprecise adjustments, the company moved to a system of sensors. The sensors
|| || || || || || || || || || || || || ||
monitor and regulate temperature, humidity, static electricity, and other factors. The sensors
|| || || || || || || || || || ||
transmit data to and from each other, and the manufacturing environment is continuously
|| || || || || || || || || || || || || ||
adjusted to assure production is successful. The network of sensors transmitting data and
|| || || || || || || || || || || || ||
the autonomous corrective actions without human interaction is called - ✔✔The Internet of
|| || || || || || || || || || || ||
Things
||
Mutual Fund Company (MFC) offers a wide array of mutual fund options to investors. Each
|| || || || || || || || || || || || || ||
mutual fund has a different fund objective and set of investment guidelines that apply to
|| || || || || || || || || || || || || || || ||
the fund. While MFC gives considerable freedom to its fund portfolio managers, they are
|| || || || || || || || || || || || || ||
required to abide by the fund's investment guidelines. To monitor compliance, MFC
|| || || || || || || || || || || ||
developed a computer algorithm. The computer algorithm continuously monitors each
|| || || || || || || || || ||
fund's compliance with investment guidelines. If a fund manager violates the investment
|| || || || || || || || || || || ||
guidelines, the computer immediately notifies MFC's internal control director, and || || || || || || || || || ||
corrective action is taken. MFC's use of the computer algorithm to monitor investment
|| || || || || || || || || || || || ||
compliance and to provide notification when corrective action is necessary illustrates use of
|| || || || || || || || || || || || ||
- ✔✔Artificial intelligence
|| ||
Data Entry Company (DEC) offers customers data entry services. A customer can hire DEC
|| || || || || || || || || || || || || ||
to enter survey data to be analyzed. Many DEC employees spend long hours entering data
|| || || || || || || || || || || || || || ||
on a computer. DEC has experienced neck strain and wrist pain complaints from their
|| || || || || || || || || || || || || ||
employees, increasing the company's workers compensation costs. DEC investigated the|| || || || || || || || || ||
complaints of its data-entry employees. DEC adopted curved keyboards for data entry, wrist-
|| || || || || || || || || || || ||
rests for those entering data, and uniform chair heights and display monitor heights to
|| || || || || || || || || || || || || ||
with accurate detailed answers
|| || ||
Which one of the following statements about the use of drones is true? - ✔✔Drones may be
|| || || || || || || || || || || || || || || || ||
equipped with cameras that relay data in real-time
|| || || || || || ||
Which one of the following uses infrared light to detect nearby objects? - ✔✔Lidar
|| || || || || || || || || || || || ||
AMRM Insurance Company sells insurance in Virginia, North Carolina, South Carolina,
|| || || || || || || || || || ||
and Georgia. The company has compiled a policyowner data base that can be used to send
|| || || || || || || || || || || || || || || ||
text messages when hurricanes approach. The company provides early warnings, storm
|| || || || || || || || || || ||
updates from the National Weather Service, and hurricane safety measures. The company
|| || || || || || || || || || || ||
credits the system with reduced hurricane claims. The use of the texting system is an
|| || || || || || || || || || || || || || ||
example of - ✔✔Preventive analytics
|| || || ||
Clear-Rite Company specializes in the clean-up of hazardous chemical spills. Workers
|| || || || || || || || || || ||
performing clean-up operations must use safety suits to prevent exposure to the chemicals.
|| || || || || || || || || || || || ||
The suits include pulse and respiration monitors, body temperature sensors, and chemical
|| || || || || || || || || || || ||
sensors. The monitors and sensors report data to a mobile operations center which is
|| || || || || || || || || || || || || ||
deployed to each clean-up site. The pulse and respiration monitors and the sensors that are
|| || || || || || || || || || || || || || ||
part of the protective gear are called - ✔✔Wearable technologies
|| || || || || || || || ||
The traditional definition of risk management reflects the traditional concept of risk as -
|| || || || || || || || || || || || || ||
✔✔Negative
WOTF is true regarding the evolution of risk and risk management? - ✔✔The definition of
|| || || || || || || || || || || || || || ||
risk has evolved to included +/- attributes
|| || || || || ||
,Many auto manufacturers have automated a portion of their assembly lines by introducing a
|| || || || || || || || || || || || ||
smart product. The smart product performs repetitive tasks, such as making the same weld
|| || || || || || || || || || || || || || ||
on each vehicle frame as it passes the smart product. These smart products, which can be
|| || || || || || || || || || || || || || || ||
fixed or mobile, reduce repetitive motion injuries that humans might suffer. They can also
|| || || || || || || || || || || || || ||
be used to perform dangerous tasks and in heavy-lifting jobs. These smart products are
|| || || || || || || || || || || || || ||
called - ✔✔Robots || ||
Which one of the following is described as a distributed database that serves as a
|| || || || || || || || || || || || || || ||
collectively shared ledger? - ✔✔Blockchain || || || ||
Autonomous Vehicle Applications (AVA) is a start-up company that develops safety || || || || || || || || || || ||
technologies that can be sold to companies that are producing autonomous vehicles. One || || || || || || || || || || || || ||
technology AVA is developing allows an autonomous vehicle to detect, extract, and analyze
|| || || || || || || || || || || || ||
images; and then to respond to the images. For example, the technology would detect a
|| || || || || || || || || || || || || || ||
presence in a crosswalk, extract the image, and a computer would analyze the image. When
|| || || || || || || || || || || || || || ||
the image was determined to be a human being, the vehicle would slow down or stop until
|| || || || || || || || || || || || || || || || ||
the crosswalk was clear. This technology, which is designed to capture and analyze images,
|| || || || || || || || || || || || || ||
and to act on the recognition of the image; is called - ✔✔Computer vision
|| || || || || || || || || || || || ||
Catastrophes such as recent earthquakes and the 2011 tsunami in Japan pointed out a need || || || || || || || || || || || || || || ||
for many organizations to evaluate and manage their - ✔✔Supply-chain risk
|| || || || || || || || || ||
Which one of the following best explains how most smart products potentially improve risk
|| || || || || || || || || || || || || ||
management? - ✔✔They generate big data to which advanced analytics can be applied || || || || || || || || || || || ||
Take Your Order (TYO) is a company that specializes in taking product orders for vendors.
|| || || || || || || || || || || || || || ||
The manufacturer of a product can run a television or internet ad for a product with a toll-
|| || || || || || || || || || || || || || || || ||
free number. Customer calls for the products are routed to TYO, where one hundred
|| || || || || || || || || || || || || ||
operators are available to receive the calls. Each operator is assigned a cubicle with a
|| || || || || || || || || || || || || || ||
computer terminal, video display monitor, and a telephone. TYO experienced high workers
|| || || || || || || || || || || ||
compensation claims from its operators, claiming neck strain, eye strain, and wrist pain. In || || || || || || || || || || || || || ||
an effort to reduce such injuries, TYO evaluated each operator's work area. The height of
|| || || || || || || || || || || || || || ||
chairs and video monitors were adjusted, curved computer keyboards and wrist-rests were
|| || || || || || || || || || || ||
,provided, and the telephones were replaced with audio headsets. Workers compensation
|| || || || || || || || || || ||
costs dropped significantly. The science of designing work spaces based on interaction
|| || || || || || || || || || || ||
between people and the equipment in the work s - ✔✔Ergonomics
|| || || || || || || || || ||
Don is the Risk Manager for Rafferty Corporation. One of his peers, Sally, asks him one day,
|| || || || || || || || || || || || || || || || ||
"How do you define risk?" When Don replies, which one of the following statements is
|| || || || || || || || || || || || || || ||
accurate? - ✔✔Risk has different meanings within the risk management and insurance
|| || || || || || || || || || || ||
communities.
In an effort to reduce expenses, increase profitability, and reduce human errors; ABC
|| || || || || || || || || || || || ||
Insurance Company decided to automate most of its personal lines underwriting function.
|| || || || || || || || || || || ||
The company now uses standardized application forms that are submitted electronically to
|| || || || || || || || || || || ||
one of the company's regional offices. At each regional office, a computer with a scanner
|| || || || || || || || || || || || || || ||
reads the applications. The computer has been programmed with acceptable answers to the
|| || || || || || || || || || || || ||
questions. If the answers on the application are all acceptable, the policy is automatically
|| || || || || || || || || || || || || ||
issued. Rejected applications are automatically forwarded to a human underwriter who
|| || || || || || || || || || ||
reviews them. The use of this technology has reduced the company's expense ratio by two
|| || || || || || || || || || || || || || ||
and a half percent, and reduced the time it takes to issue a policy. ABC Insurance
|| || || || || || || || || || || || || || || ||
Company's use of computers to evaluate applications electronically is an application of -
|| || || || || || || || || || || || ||
✔✔Artificial intelligence ||
A municipal water plant installed water flow sensors and water pressure sensors on the
|| || || || || || || || || || || || || ||
water pipes leaving the plant. The sensors make sure water is flowing properly and that
|| || || || || || || || || || || || || || ||
there are no leaks or clogs which could produce a loss. These types of sensors are -
|| || || || || || || || || || || || || || || || ||
✔✔Mechanical sensors ||
Which one of the following is a tool that can be used by fraud investigators to compare
|| || || || || || || || || || || || || || || || ||
documents and analyze notes? - ✔✔Text mining || || || || || ||
Last year, three Metro City firemen died responding to a fire at a chemical plant, when they
|| || || || || || || || || || || || || || || || ||
were overcome by toxic fumes. In response, Metro City is purchasing advanced first
|| || || || || || || || || || || || ||
responder gear. It includes special flame retardant suits with chemical and explosive fume
|| || || || || || || || || || || || ||
sensors, air quality sensors, and heat sensors. Responders will also wear special watches
|| || || || || || || || || || || || ||
, that will track a responder's pulse, respiration, and blood pressure; and helmets that include
|| || || || || || || || || || || || ||
video cameras. All of these sensors will feed data to a computer in real-time. The computer
|| || || || || || || || || || || || || || || || ||
will analyze the data and issue threat levels and evacuation orders, if necessary. The
|| || || || || || || || || || || || || ||
protective gear Metro City will purchase and the data transmission and analysis capability
|| || || || || || || || || || || || ||
illustrate the use of - ✔✔Smart products || || || || || ||
Precision Electronic Components manufactures circuit boards, microchips, and other
|| || || || || || || || ||
electronic products. Given the precision necessary for their products, the manufacturing
|| || || || || || || || || || ||
environment must be controlled. Temperature, humidity, static electricity and other factors || || || || || || || || || || ||
must be monitored. After losing several batches of products due to human monitoring
|| || || || || || || || || || || || ||
failures and imprecise adjustments, the company moved to a system of sensors. The sensors
|| || || || || || || || || || || || || ||
monitor and regulate temperature, humidity, static electricity, and other factors. The sensors
|| || || || || || || || || || ||
transmit data to and from each other, and the manufacturing environment is continuously
|| || || || || || || || || || || || || ||
adjusted to assure production is successful. The network of sensors transmitting data and
|| || || || || || || || || || || || ||
the autonomous corrective actions without human interaction is called - ✔✔The Internet of
|| || || || || || || || || || || ||
Things
||
Mutual Fund Company (MFC) offers a wide array of mutual fund options to investors. Each
|| || || || || || || || || || || || || ||
mutual fund has a different fund objective and set of investment guidelines that apply to
|| || || || || || || || || || || || || || || ||
the fund. While MFC gives considerable freedom to its fund portfolio managers, they are
|| || || || || || || || || || || || || ||
required to abide by the fund's investment guidelines. To monitor compliance, MFC
|| || || || || || || || || || || ||
developed a computer algorithm. The computer algorithm continuously monitors each
|| || || || || || || || || ||
fund's compliance with investment guidelines. If a fund manager violates the investment
|| || || || || || || || || || || ||
guidelines, the computer immediately notifies MFC's internal control director, and || || || || || || || || || ||
corrective action is taken. MFC's use of the computer algorithm to monitor investment
|| || || || || || || || || || || || ||
compliance and to provide notification when corrective action is necessary illustrates use of
|| || || || || || || || || || || || ||
- ✔✔Artificial intelligence
|| ||
Data Entry Company (DEC) offers customers data entry services. A customer can hire DEC
|| || || || || || || || || || || || || ||
to enter survey data to be analyzed. Many DEC employees spend long hours entering data
|| || || || || || || || || || || || || || ||
on a computer. DEC has experienced neck strain and wrist pain complaints from their
|| || || || || || || || || || || || || ||
employees, increasing the company's workers compensation costs. DEC investigated the|| || || || || || || || || ||
complaints of its data-entry employees. DEC adopted curved keyboards for data entry, wrist-
|| || || || || || || || || || || ||
rests for those entering data, and uniform chair heights and display monitor heights to
|| || || || || || || || || || || || || ||
