CPCU 500 3rd Edition Final Practice exam 1Qustions & Answers 100% Correct!!!

Risk involves the possibility of a negative outcome. Possibility means - ANSWERThat an outcome may or may not occur. Risk can be classified as subjective or objective. Which one of the following statements is correct with respect to these risk classifications? - ANSWERSubjective risk can exist even where objective risk does not. The concept of correlation, in the context of why enterprise risk management works, - ANSWERIs the proposition that correlation increases risk while uncorrelated risks can reduce risk The use of data gleaned from sensors to react immediately to hazardous situations is known as - ANSWERReal-time risk management. Delmond Manufacturing is opening a new manufacturing facility in a building that it purchased from a competitor. Using the information below, which one of the following represents the cost of risk of opening the new facility? New building cost $60.0 million Safety system upgrades $6.0 million Insurance premiums $1.5 million Retained losses $3.0 million Risk management department budget at the site $1.0 million - ANSWER$11.5 million An organization must meet the standard of care that it owes to others in order to ensure that - ANSWERLegal obligations are satisfied A risk management program must be monitored and periodically revised, and that revision involves four steps. Which one of the following is one of those four steps? - ANSWERCompare actual results with the established performance standards. Property insurance policies not only protect the property owner but also generally protect a secured lender's interest in the financed property by - ANSWERNaming the lender on the owner's policy. Perils are an important aspect of property insurance. Which one of the following statements is correct with respect to perils? - ANSWERA peril is the actual means by which property is damaged or destroyed such as fire, lightning, windstorm, hail, or theft. A building contractor uses lower grade materials than called for in the specifications for an office building. A year after the building was completed, a balcony collapses, injuri