CGFO - Financial Administration Exam
Questions and Answers Graded A+
According to GASB 10, list the types of risk - Correct answer-Torts
Theft of damage to, or destruction of assets
Business interuption
Errors or omissions
Job-related illnesses or injuries to employees
Acts of God
Any other risk of loss assumed under a policy or participation contract issued by a
public entity risk pool
Risk of loss resulting when an entity agrees to provide accident and health, dental,
and other medical benefits to its employees.
What are the two ways to mange risk? - Correct answer-Manage an organization's
activities to minimize adverse effects of certain types of losses
Mitigate risk by purchasing insurance.
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,What are three reasons to manage risk? - Correct answer-Create a safe workplace
Prevent financial losses
Provide stability (budget)
What are the three approaches to managing operational and financial risk> -
Correct answer-Investment portfolio policies (long-term and short-term)
Diversification strategies (spread risk)
Custody of assets (procedures)
What are 7 sources of risk? - Correct answer-Physical
Legal
Operational
Political
Social
Economic
Cognitive (I.T. hack)
What are three tools to minimize risk? - Correct answer-Risk transfer - shift the
burden to another, purchase insurance, or risk pool, level premiums for budget
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,Risk retention - assume risk responsibilities internally
Risk avoidance - Do not provide service
What are the four parts of a Risk Management Program? - Correct answer-Risk
Identification
Risk evaluation
Risk treatment
Implementation
In the case of Risk Retention, if claims are greater than premiums = (Gain or Loss)
- Correct answer-Loss
In the case of Risk Retention, if claims are less than premiums = (Gain or Loss) -
Correct answer-Gain
What is the advantages of Risk Retention? - Correct answer-Lower premiums
Align incentives
Create a safer work environment
What are the advantages of participating in a Risk Pool? - Correct answer-Vehicle
for government to pool funds.
Affordable cost through economies of scale
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, Provide services to reduce risk
Risk Pool - Premium = - Correct answer-Revenue
Define IBNR - Correct answer-Incurred but not reported claims
When is IBNR recorded? - Correct answer-Record when event triggers coverage
under policy
What amount is IBNR recorded? - Correct answer-Amount based on estimate to
settle claim.
How is IBNR recorded? - Correct answer-As an accrual based on probable loss
that can be reasonably estimated, recoreded as an expense/liability.
How do we minimize risk? - Correct answer-Provide safety in the workplace
Inspect buildings
Install extinquishers, sprinklers, smoke detectors
Training
What three areas should we monitor for risks? - Correct answer-One-time projects
Geography (example: stormwater)
Unique Services
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
Questions and Answers Graded A+
According to GASB 10, list the types of risk - Correct answer-Torts
Theft of damage to, or destruction of assets
Business interuption
Errors or omissions
Job-related illnesses or injuries to employees
Acts of God
Any other risk of loss assumed under a policy or participation contract issued by a
public entity risk pool
Risk of loss resulting when an entity agrees to provide accident and health, dental,
and other medical benefits to its employees.
What are the two ways to mange risk? - Correct answer-Manage an organization's
activities to minimize adverse effects of certain types of losses
Mitigate risk by purchasing insurance.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,What are three reasons to manage risk? - Correct answer-Create a safe workplace
Prevent financial losses
Provide stability (budget)
What are the three approaches to managing operational and financial risk> -
Correct answer-Investment portfolio policies (long-term and short-term)
Diversification strategies (spread risk)
Custody of assets (procedures)
What are 7 sources of risk? - Correct answer-Physical
Legal
Operational
Political
Social
Economic
Cognitive (I.T. hack)
What are three tools to minimize risk? - Correct answer-Risk transfer - shift the
burden to another, purchase insurance, or risk pool, level premiums for budget
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,Risk retention - assume risk responsibilities internally
Risk avoidance - Do not provide service
What are the four parts of a Risk Management Program? - Correct answer-Risk
Identification
Risk evaluation
Risk treatment
Implementation
In the case of Risk Retention, if claims are greater than premiums = (Gain or Loss)
- Correct answer-Loss
In the case of Risk Retention, if claims are less than premiums = (Gain or Loss) -
Correct answer-Gain
What is the advantages of Risk Retention? - Correct answer-Lower premiums
Align incentives
Create a safer work environment
What are the advantages of participating in a Risk Pool? - Correct answer-Vehicle
for government to pool funds.
Affordable cost through economies of scale
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, Provide services to reduce risk
Risk Pool - Premium = - Correct answer-Revenue
Define IBNR - Correct answer-Incurred but not reported claims
When is IBNR recorded? - Correct answer-Record when event triggers coverage
under policy
What amount is IBNR recorded? - Correct answer-Amount based on estimate to
settle claim.
How is IBNR recorded? - Correct answer-As an accrual based on probable loss
that can be reasonably estimated, recoreded as an expense/liability.
How do we minimize risk? - Correct answer-Provide safety in the workplace
Inspect buildings
Install extinquishers, sprinklers, smoke detectors
Training
What three areas should we monitor for risks? - Correct answer-One-time projects
Geography (example: stormwater)
Unique Services
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
