Chapter 23 Enterprise Risk Management

A) Financial risk
B) Strategic risk
C) Hazard risk
D) Occupational risk
E) Operational risk



Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 23-01 Outline the exposures to risk in a company's business and how a company co
AACSB : Reflective Thinking
Section : 23 Introduction
Topic : Risk management terminology
Bloom's : Remember




2) To effectively manage risk, the first step is to:
2)


A) purchase liability insurance.
B) create an emergency cash fund.
C) establish prevention programs.
D) eliminate all international risks.
E) identify and eliminate all strategic risks.



Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 23-01 Outline the exposures to risk in a company's business and how a company co
Topic : Risk management
AACSB : Reflective Thinking
Section : 23 Introduction
Bloom's : Remember

,3) Which type of insurance protects against the risks related to a defectively manufactured
product?
3)


A) Business interruption insurance
B) Employer's liability insurance
C) Property insurance
D) Vehicle insurance
E) Commercial liability insurance



Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 23-01 Outline the exposures to risk in a company's business and how a company co
AACSB : Reflective Thinking
Section : 23.1 Insurance
Topic : Insurance
Bloom's : Remember




4) Which type of insurance helps replace a company's income during the time period the
company is closed due to a major hurricane?
4)


A) Business interruption insurance
B) Employer's liability insurance
C) Property insurance
D) Vehicle insurance
E) Commercial liability insurance

,Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 23-01 Outline the exposures to risk in a company's business and how a company co
AACSB : Reflective Thinking
Section : 23.1 Insurance
Topic : Insurance
Bloom's : Remember




5) Which one of the following will be least helpful in offsetting a company's costs from a
loss event?
5)


A) Self-insurance pool of cash
B) Insurance policy exclusion
C) Abidance with policy notification provisions
D) Currently paid insurance premiums
E) Low insurance deductible



Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 23-01 Outline the exposures to risk in a company's business and how a company co
AACSB : Reflective Thinking
Section : 23.1 Insurance
Topic : Insurance
Bloom's : Understand




6) The Ukazim family raises crops on several hundred acres of land. If grain prices fall
while the crops are being harvested, the family would experience a significant loss. The family
could this price risk by purchasing financial securities to offset it.
6)

, A) insure
B) derive
C) hedge
D) forward
E) manipulate



Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 23-01 Outline the exposures to risk in a company's business and how a company co
Section : 23.2 Managing Financial Risk
Topic : Hedging
AACSB : Reflective Thinking
Bloom's : Remember




7) The value of a stock option is dependent upon the value of the underlying stock. In other
words, a stock option is a:
7)


A) forward agreement.
B) derivative security.
C) mezzanine asset.
D) contingent security.
E) junior security.



Question Details
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 1 Basic
Learning Objective : 23-01 Outline the exposures to risk in a company's business and how a company co
Section : 23.2 Managing Financial Risk
AACSB : Reflective Thinking
Topic : Derivatives and other securities
Bloom's : Remember