CPCU 500 Exam Questions & Answers 100% Correct

Describe the 2 elements of risk - ANSWER1.) Uncertainty of outcomes: risk involves uncertainty about the type of outcome, timing o outcome, or both 2.) possibility of a negative outcome: at least of the potential outcomes is negative Whats the difference between possibility and probability? - ANSWERPossibility: outcome may or may not occur Probability: likelihood that an outcome will occur Does Possibility or Probability measure risk? - ANSWERProbability does, possibility DOES NOT Explain how understanding various outcome probabilities can aid an organization in its risk management efforts - ANSWERWith understanding various outcome possibilities, an organization can focus on its risk management efforts on risk that can be appropriately manages. Also it can also use probabilities to determine which risks to take and which ones not Describe how classifying risk helps an organization'r risk management process - ANSWERClassification can help with assessing and managing risks. Many risks in the same classification have similar attributes and can be managed with similar techniques Helps with the administrative function of risk management by helping to ensure that risks in the same classification are less likely to be overlooked