CPCU 500 EXAM UPDATED SCRIPT LATEST
QUESTIONS AND ANSWERS SURE A+
✔✔Strategic risk - ✔✔Uncertainties associated with the organization's long-term goals
and management decisions
✔✔Operational risk - ✔✔Uncertainties associated with the organization's procedures,
systems, and policies.
✔✔Financial risk - ✔✔Uncertainties associated with the organization's financial
activities.
✔✔Natural Risks - ✔✔Natural risks are largely beyond human control. Natural perils
known to cause property damage include freezing, sinkholes, and vermin infestation.
Organizations can implement loss-reduction measures.
✔✔Human Risk Sources - ✔✔Include deliberate acts of individuals or groups, as well as
events that are not deliberate but involve some element of human intervention.
Examples include terrorism, vandalism, and explosion.
✔✔Property loss exposure - ✔✔A condition that presents the possibility that a person or
an organization will sustain a loss resulting from damage (including destruction, taking,
or loss of use) to property in which that person or organization has a financial interest.
,✔✔Liability loss exposure - ✔✔Any condition or situation that presents the possibility of
a claim alleging legal responsibility of a person or business for injury or damage
suffered by another party.
✔✔Civil law - ✔✔A classification of law that applies to legal matters not governed by
criminal law and that protects rights and provides remedies for breaches of duties owed
to others.
✔✔Tort law - ✔✔The branch of civil law that deals with civil wrongs other than breaches
of contract.
✔✔Negligence - ✔✔The failure to exercise the degree of care that a reasonable person
in a similar situation would exercise to avoid harming others.
✔✔Intentional tort - ✔✔A tort committed by a person who foresees (or should be able to
foresee) that his or her act will harm another person.
✔✔Strict liability (absolute liability) - ✔✔Liability imposed by a court or by a statute in
the absence of fault when harm results from activities or conditions that are extremely
dangerous, unnatural, ultrahazardous, extraordinary, abnormal, or inappropriate.
✔✔Fiduciary Duty - ✔✔The duty to act in the best interests of another.
✔✔Duty of care - ✔✔Act in good faith and in what they reasonably believe is the
organization's best interest.
✔✔Duty of loyalty - ✔✔Cannot take business opportunities away from the company
they work for.
✔✔Duty of disclosure - ✔✔Must disclose material facts to all people who have a right to
know them.
✔✔Duty of obedience - ✔✔Required to perform their duties according to federal and
state laws and the terms of the corporate charter.
✔✔What are employment practices liability (EPL) risks? - ✔✔EPL risks are legal risks
that employers face under various national and local laws related to employment
practices.
✔✔What is disparate treatment in the context of discrimination? - ✔✔Disparate
treatment occurs when one individual is treated differently than others in similar
situations, such as a female employee being penalized for poor punctuality while male
employees are not.
, ✔✔What is disparate impact in the context of discrimination? - ✔✔Disparate impact
occurs when policies that apply to everyone inadvertently exclude a certain group, such
as requiring attendance at a specific religious service that disadvantages applicants of
other faiths.
✔✔What is wrongful termination? - ✔✔Wrongful termination refers to claims made by
employees who believe they were fired for discriminatory reasons or other unjust
causes, despite the employment at will doctrine allowing termination with or without
cause.
✔✔What constitutes sexual harassment in the workplace? - ✔✔Sexual harassment
involves unwanted sexual advances or demands that create financial and reputational
risks for organizations, particularly if they lead to a hostile work environment.
✔✔What is a hostile work environment? - ✔✔A hostile work environment exists when
an employee experiences severe or pervasive sexual harassment that alters the
conditions of employment, creating an abusive atmosphere.
✔✔What is retaliation in the context of employment law? - ✔✔Retaliation occurs when
management retaliates against an employee for taking legitimate actions, such as filing
a complaint or being a whistleblower, often combined with discrimination claims.
✔✔What are fiduciary liability risks? - ✔✔Fiduciary liability risks arise when beneficiaries
of an employee benefit plan sue plan officials for breach of fiduciary duties, particularly if
the plan loses significant value.
✔✔What is the duty of loyalty for a fiduciary? - ✔✔A fiduciary must act solely in the best
interests of the plan and all participants and beneficiaries.
✔✔What does prudence mean for a fiduciary? - ✔✔Prudence requires fiduciaries to
carry out their duties with care, skill, judgment, and diligence comparable to a prudent
person in similar circumstances.
✔✔What is the importance of diversification for fiduciaries? - ✔✔Fiduciaries must
ensure that plan investments are sufficiently diversified to minimize the risk of large
losses.
✔✔What does adherence mean in the context of fiduciary duties? - ✔✔Adherence
means fiduciaries must act according to plan documents and applicable laws, ensuring
compliance even if the plan document is not compliant.
✔✔What are common human resource risks? - ✔✔Common human resource risks
include work-related injury and illness, retirement and resignation, and work-related
violence.
QUESTIONS AND ANSWERS SURE A+
✔✔Strategic risk - ✔✔Uncertainties associated with the organization's long-term goals
and management decisions
✔✔Operational risk - ✔✔Uncertainties associated with the organization's procedures,
systems, and policies.
✔✔Financial risk - ✔✔Uncertainties associated with the organization's financial
activities.
✔✔Natural Risks - ✔✔Natural risks are largely beyond human control. Natural perils
known to cause property damage include freezing, sinkholes, and vermin infestation.
Organizations can implement loss-reduction measures.
✔✔Human Risk Sources - ✔✔Include deliberate acts of individuals or groups, as well as
events that are not deliberate but involve some element of human intervention.
Examples include terrorism, vandalism, and explosion.
✔✔Property loss exposure - ✔✔A condition that presents the possibility that a person or
an organization will sustain a loss resulting from damage (including destruction, taking,
or loss of use) to property in which that person or organization has a financial interest.
,✔✔Liability loss exposure - ✔✔Any condition or situation that presents the possibility of
a claim alleging legal responsibility of a person or business for injury or damage
suffered by another party.
✔✔Civil law - ✔✔A classification of law that applies to legal matters not governed by
criminal law and that protects rights and provides remedies for breaches of duties owed
to others.
✔✔Tort law - ✔✔The branch of civil law that deals with civil wrongs other than breaches
of contract.
✔✔Negligence - ✔✔The failure to exercise the degree of care that a reasonable person
in a similar situation would exercise to avoid harming others.
✔✔Intentional tort - ✔✔A tort committed by a person who foresees (or should be able to
foresee) that his or her act will harm another person.
✔✔Strict liability (absolute liability) - ✔✔Liability imposed by a court or by a statute in
the absence of fault when harm results from activities or conditions that are extremely
dangerous, unnatural, ultrahazardous, extraordinary, abnormal, or inappropriate.
✔✔Fiduciary Duty - ✔✔The duty to act in the best interests of another.
✔✔Duty of care - ✔✔Act in good faith and in what they reasonably believe is the
organization's best interest.
✔✔Duty of loyalty - ✔✔Cannot take business opportunities away from the company
they work for.
✔✔Duty of disclosure - ✔✔Must disclose material facts to all people who have a right to
know them.
✔✔Duty of obedience - ✔✔Required to perform their duties according to federal and
state laws and the terms of the corporate charter.
✔✔What are employment practices liability (EPL) risks? - ✔✔EPL risks are legal risks
that employers face under various national and local laws related to employment
practices.
✔✔What is disparate treatment in the context of discrimination? - ✔✔Disparate
treatment occurs when one individual is treated differently than others in similar
situations, such as a female employee being penalized for poor punctuality while male
employees are not.
, ✔✔What is disparate impact in the context of discrimination? - ✔✔Disparate impact
occurs when policies that apply to everyone inadvertently exclude a certain group, such
as requiring attendance at a specific religious service that disadvantages applicants of
other faiths.
✔✔What is wrongful termination? - ✔✔Wrongful termination refers to claims made by
employees who believe they were fired for discriminatory reasons or other unjust
causes, despite the employment at will doctrine allowing termination with or without
cause.
✔✔What constitutes sexual harassment in the workplace? - ✔✔Sexual harassment
involves unwanted sexual advances or demands that create financial and reputational
risks for organizations, particularly if they lead to a hostile work environment.
✔✔What is a hostile work environment? - ✔✔A hostile work environment exists when
an employee experiences severe or pervasive sexual harassment that alters the
conditions of employment, creating an abusive atmosphere.
✔✔What is retaliation in the context of employment law? - ✔✔Retaliation occurs when
management retaliates against an employee for taking legitimate actions, such as filing
a complaint or being a whistleblower, often combined with discrimination claims.
✔✔What are fiduciary liability risks? - ✔✔Fiduciary liability risks arise when beneficiaries
of an employee benefit plan sue plan officials for breach of fiduciary duties, particularly if
the plan loses significant value.
✔✔What is the duty of loyalty for a fiduciary? - ✔✔A fiduciary must act solely in the best
interests of the plan and all participants and beneficiaries.
✔✔What does prudence mean for a fiduciary? - ✔✔Prudence requires fiduciaries to
carry out their duties with care, skill, judgment, and diligence comparable to a prudent
person in similar circumstances.
✔✔What is the importance of diversification for fiduciaries? - ✔✔Fiduciaries must
ensure that plan investments are sufficiently diversified to minimize the risk of large
losses.
✔✔What does adherence mean in the context of fiduciary duties? - ✔✔Adherence
means fiduciaries must act according to plan documents and applicable laws, ensuring
compliance even if the plan document is not compliant.
✔✔What are common human resource risks? - ✔✔Common human resource risks
include work-related injury and illness, retirement and resignation, and work-related
violence.
