1. What is the main characteristic of a speculative risk?
A. The risk can only result in a loss
B. The risk involves both a potential gain and a loss
C. The risk cannot be insured
D. The risk is controllable through safety measures
Answer: B) The risk involves both a potential gain and a loss
Rationale: Speculative risks involve scenarios where there is a
possibility of both gain and loss, unlike pure risks, which only involve
the possibility of loss. (quizlet.com)
2. What does 'risk control' primarily focus on?
A. Shifting the financial burden of risks to another party
B. Identifying risks that can be transferred to insurance companies
C. Preventing or reducing the impact of risks before they cause loss
D. Forecasting future risks to avoid losses
Answer: C) Preventing or reducing the impact of risks before they
cause loss
Rationale: Risk control focuses on preventing or reducing the impact of
risks through measures like safety protocols, maintenance, and
training. (stuvia.com)
3. What does the term 'peril' refer to in risk management?
A. A condition that increases the frequency of loss
,B. A potential cause of loss
C. A financial loss resulting from an event
D. A method of transferring risk
Answer: B) A potential cause of loss
Rationale: A peril is an event or condition that can cause a loss, such as
fire, theft, or natural disasters.
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4. Which of the following describes a ‘pure risk’?
A. A situation where there is both a potential for gain and loss
B. A situation with no risk of loss, only potential for gain
C. A situation with only a potential for loss or no loss
D. A speculative investment with high chances of gain
Answer: C) A situation with only a potential for loss or no loss
Rationale: Pure risk involves only the potential for loss or no loss, with
no chance of gain.
([quizlet.com](https://quizlet.com/967155868/rmin
5. In a business, what does 'enterprise risk management' (ERM) aim to
do?
A. Focus solely on financial risks while ignoring operational risks
B. Identify and manage all types of risks across the entire organization
C. Only address risks related to external factors like competitors or
market trends
, D. Focus on individual risks rather than organizational-level risk
strategies
Answer: B) Identify and manage all types of risks across the entire
organization
Rationale: ERM is a holistic approach to managing all risks, including
financial, operational, and strategic risks, across an entire organization.
(quizlet.com)
6. Which of the following is a characteristic of systematic risk?
A. It can be eliminated through diversification
B. It affects only specific industries or companies
C. It is associated with overall market movements or economic factors
D. It is unrelated to market trends or economic conditions
Answer: C) It is associated with overall market movements or economic
factors
Rationale: Systematic risk, also known as market risk, refers to risks
that affect the entire market or economy, such as recessions or interest
rate changes, and cannot be eliminated through diversification.
(quizlet.com)
7. What is the function of a risk management committee?
A. To oversee and guide the organization’s risk management activities
B) To eliminate all potential risks from the organization
C. To increase the frequency of risk events
D. To transfer all risks to insurance companies
A. The risk can only result in a loss
B. The risk involves both a potential gain and a loss
C. The risk cannot be insured
D. The risk is controllable through safety measures
Answer: B) The risk involves both a potential gain and a loss
Rationale: Speculative risks involve scenarios where there is a
possibility of both gain and loss, unlike pure risks, which only involve
the possibility of loss. (quizlet.com)
2. What does 'risk control' primarily focus on?
A. Shifting the financial burden of risks to another party
B. Identifying risks that can be transferred to insurance companies
C. Preventing or reducing the impact of risks before they cause loss
D. Forecasting future risks to avoid losses
Answer: C) Preventing or reducing the impact of risks before they
cause loss
Rationale: Risk control focuses on preventing or reducing the impact of
risks through measures like safety protocols, maintenance, and
training. (stuvia.com)
3. What does the term 'peril' refer to in risk management?
A. A condition that increases the frequency of loss
,B. A potential cause of loss
C. A financial loss resulting from an event
D. A method of transferring risk
Answer: B) A potential cause of loss
Rationale: A peril is an event or condition that can cause a loss, such as
fire, theft, or natural disasters.
Studypool
4. Which of the following describes a ‘pure risk’?
A. A situation where there is both a potential for gain and loss
B. A situation with no risk of loss, only potential for gain
C. A situation with only a potential for loss or no loss
D. A speculative investment with high chances of gain
Answer: C) A situation with only a potential for loss or no loss
Rationale: Pure risk involves only the potential for loss or no loss, with
no chance of gain.
([quizlet.com](https://quizlet.com/967155868/rmin
5. In a business, what does 'enterprise risk management' (ERM) aim to
do?
A. Focus solely on financial risks while ignoring operational risks
B. Identify and manage all types of risks across the entire organization
C. Only address risks related to external factors like competitors or
market trends
, D. Focus on individual risks rather than organizational-level risk
strategies
Answer: B) Identify and manage all types of risks across the entire
organization
Rationale: ERM is a holistic approach to managing all risks, including
financial, operational, and strategic risks, across an entire organization.
(quizlet.com)
6. Which of the following is a characteristic of systematic risk?
A. It can be eliminated through diversification
B. It affects only specific industries or companies
C. It is associated with overall market movements or economic factors
D. It is unrelated to market trends or economic conditions
Answer: C) It is associated with overall market movements or economic
factors
Rationale: Systematic risk, also known as market risk, refers to risks
that affect the entire market or economy, such as recessions or interest
rate changes, and cannot be eliminated through diversification.
(quizlet.com)
7. What is the function of a risk management committee?
A. To oversee and guide the organization’s risk management activities
B) To eliminate all potential risks from the organization
C. To increase the frequency of risk events
D. To transfer all risks to insurance companies
