INTRO TO RISK MANAGEMENT EXAM
QUESTIONS AND ANSWERS
risk management - answer- process that identifies loss exposures faced by an
organization and selects the most appropriate techniques for treating such exposure
loss exposure - answer- any situation or circumstance in which a loss is possible,
regardless of whether a loss occures
identify potential losses
measure and analyze the loss exposures
select the appropriate combination of techniques for treating the loss exposure
implement and monitor the risk management program - answer- risk management
process
questionnaire - answer- source of information to identify loss exposure
measure and analyze loss exposure - answer- estimate the frequency and severity
of loss for each type of loss exposure
risk control - answer- techniques that reduce the frequency and severity of losses
avoidance - answer- certain loss exposure is never acquired, or an existing loss
exposure is abandoned
ex. draining pool
loss prevention - answer- measures that reduce the frequency of a particular loss
ex. sensor at best buy
loss reduction - answer- measures that reduce the severity of a loss after it occurs
ex. sprinkler system for fire
risk financing - answer- techniques that provide for the funding of losses
retention
non-insurance transfers
commercial insurance - answer- methods of risk financing
retention - answer- the firm retains part or all of the losses that can result from a
given loss
save on loss costs
save on expenses
encourage loss prevention
increase cash flow - answer- advantages of retention
possible higher losses
QUESTIONS AND ANSWERS
risk management - answer- process that identifies loss exposures faced by an
organization and selects the most appropriate techniques for treating such exposure
loss exposure - answer- any situation or circumstance in which a loss is possible,
regardless of whether a loss occures
identify potential losses
measure and analyze the loss exposures
select the appropriate combination of techniques for treating the loss exposure
implement and monitor the risk management program - answer- risk management
process
questionnaire - answer- source of information to identify loss exposure
measure and analyze loss exposure - answer- estimate the frequency and severity
of loss for each type of loss exposure
risk control - answer- techniques that reduce the frequency and severity of losses
avoidance - answer- certain loss exposure is never acquired, or an existing loss
exposure is abandoned
ex. draining pool
loss prevention - answer- measures that reduce the frequency of a particular loss
ex. sensor at best buy
loss reduction - answer- measures that reduce the severity of a loss after it occurs
ex. sprinkler system for fire
risk financing - answer- techniques that provide for the funding of losses
retention
non-insurance transfers
commercial insurance - answer- methods of risk financing
retention - answer- the firm retains part or all of the losses that can result from a
given loss
save on loss costs
save on expenses
encourage loss prevention
increase cash flow - answer- advantages of retention
possible higher losses
