CISR Elements of Risk Management Exam
QUESTIONS AND ANSWERS
Accident - ANSWER>>an unexpected and unintentional event that tends to
result in damage or injury
accounting rate of return (ARR) - ANSWER>>a tool that measures the
percentage return of average annual cash flows on initial investment
active retention - ANSWER>>a planned financing solution in which internal
funds can be used to pay losses
avoidance - ANSWER>>precludes or discontinues an activity to avoid the chance
of loss, eliminating both positive and negative outcomes
budgeted retention - ANSWER>>the portion of expected losses an organization
is willing and able to retain
contractual transfer - ANSWER>>the shift of responsibility of certain liabilities to
another party. Contractual transfers include exculpatory agreements, waivers of
subrogation, limit of liability clauses, and hold harmless agreements
cost-benefit analysis - ANSWER>>a measurement of total anticipated benefits
after costs are subtracted
claim - ANSWER>>a demand for payment or a company's obligation to pay as
result of a loss or occurrence
deductible plan - ANSWER>>a risk financing program in which an Insured elects
to reimburse the insurer for losses up to a stated amount
, dividend plan - ANSWER>>a guaranteed cost plan that has dividend options
which return a portion of the premium when an Insurer has had an overall good
year and the Insured meets a certain loss ration criterion
duplication - ANSWER>>the establishment of backups for critical systems or
operations
economic class of risks - ANSWER>>risks arising from internal operations,
general economic conditions, external competition, conditions in the financial
marketplace, and entrepreneurial activities, such as new products or services
exculpatory agreement - ANSWER>>A pre-event exoneration of one party for
events that may result in any loss or a specified loss to another party
expected losses - ANSWER>>An estimate of total losses of a given type that an
insurance company can "expect" in a given period
exposure - ANSWER>>a situation, practice, or condition that may lead to an
insured's susceptibility to adverse financial consequences or loss
external financing - ANSWER>>Insurance purchased to pay for losses that fall
outside an organization's risk appetite and ability
frequency - ANSWER>>the number of claims that occur or that an Insurer
expects to occur within a given period of time
guaranteed cost plan - ANSWER>>a finance plan for organizations that have low
risk appetites, desire little variability in cost of risk, and have little or no ability
to manage services. The rate is multiplied by the exposure and is then adjusted
by the experience modifier and scheduled and/or discretionary credits/debits
hazard - ANSWER>>a factor that increases the likelihood that a peril will occur
QUESTIONS AND ANSWERS
Accident - ANSWER>>an unexpected and unintentional event that tends to
result in damage or injury
accounting rate of return (ARR) - ANSWER>>a tool that measures the
percentage return of average annual cash flows on initial investment
active retention - ANSWER>>a planned financing solution in which internal
funds can be used to pay losses
avoidance - ANSWER>>precludes or discontinues an activity to avoid the chance
of loss, eliminating both positive and negative outcomes
budgeted retention - ANSWER>>the portion of expected losses an organization
is willing and able to retain
contractual transfer - ANSWER>>the shift of responsibility of certain liabilities to
another party. Contractual transfers include exculpatory agreements, waivers of
subrogation, limit of liability clauses, and hold harmless agreements
cost-benefit analysis - ANSWER>>a measurement of total anticipated benefits
after costs are subtracted
claim - ANSWER>>a demand for payment or a company's obligation to pay as
result of a loss or occurrence
deductible plan - ANSWER>>a risk financing program in which an Insured elects
to reimburse the insurer for losses up to a stated amount
, dividend plan - ANSWER>>a guaranteed cost plan that has dividend options
which return a portion of the premium when an Insurer has had an overall good
year and the Insured meets a certain loss ration criterion
duplication - ANSWER>>the establishment of backups for critical systems or
operations
economic class of risks - ANSWER>>risks arising from internal operations,
general economic conditions, external competition, conditions in the financial
marketplace, and entrepreneurial activities, such as new products or services
exculpatory agreement - ANSWER>>A pre-event exoneration of one party for
events that may result in any loss or a specified loss to another party
expected losses - ANSWER>>An estimate of total losses of a given type that an
insurance company can "expect" in a given period
exposure - ANSWER>>a situation, practice, or condition that may lead to an
insured's susceptibility to adverse financial consequences or loss
external financing - ANSWER>>Insurance purchased to pay for losses that fall
outside an organization's risk appetite and ability
frequency - ANSWER>>the number of claims that occur or that an Insurer
expects to occur within a given period of time
guaranteed cost plan - ANSWER>>a finance plan for organizations that have low
risk appetites, desire little variability in cost of risk, and have little or no ability
to manage services. The rate is multiplied by the exposure and is then adjusted
by the experience modifier and scheduled and/or discretionary credits/debits
hazard - ANSWER>>a factor that increases the likelihood that a peril will occur
