IRM Exam 1 Questions with Complete
Solutions
Liability Loss Exposure - ANSWERS-Any condition or situation that presents the possibility of a
claim alleging legal responsibility of a person or business for injury or damage suffered by
another party.
Personal loss exposure - ANSWERS-any condition or situation that presents the possibility of a
financial loss to an individual or a family by such causes as death, sickness, injury, or
unemployment
Personnel loss exposure - ANSWERS-any condition or situation that presents the possibility of a
financial loss to a business because of the death, disability, retirement, or resignation of key
employees
Property loss exposure - ANSWERS-any condition or situation that presents the possibility that a
property loss will happen
Risk - ANSWERS-The uncertainty of an outcome - the chance of something happening that will
have an impact on objectives
Terms of likelihood and consequence - ANSWERS-What is risk measured in?
1- physical
2- financial
3- human
4- natural
, 5- intangible
6- reputation / brand - ANSWERS-6 categories of assets
Risk Management - ANSWERS-the process of identifying, assessing and controlling threats to an
organization's capital and earnings. These threats, or risks, could stem from a wide variety of
sources, including financial uncertainty, legal liabilities, strategic management errors, accidents
and natural disasters
1. Risk Identification: Identifying potential losses and their causes
2. Risk Analysis: Estimating the likelihood and expected value of potential losses
3. Designing a strategy: Choosing an appropriate mix of risk control and risk financing
techniques
4. Implementation: Carrying out the details of the plan
5. Review: Monitoring the results of the plan, and considering the impact of internal and
external developments - ANSWERS-Steps in the Risk Management Process
1. Prepare for potential losses in the most economical way
2. Reduce anxiety
3. Meet any external legal obligations
4. Social Responsibility - ANSWERS-Pre-Loss Objectives of Risk Management
-Survival of the firm
-Continue operating
-Stability of earnings
-Continued growth of the firm
-Minimize the effects that a loss will have on other persons and on society - ANSWERS-Post-Loss
Objectives of Risk Management
Solutions
Liability Loss Exposure - ANSWERS-Any condition or situation that presents the possibility of a
claim alleging legal responsibility of a person or business for injury or damage suffered by
another party.
Personal loss exposure - ANSWERS-any condition or situation that presents the possibility of a
financial loss to an individual or a family by such causes as death, sickness, injury, or
unemployment
Personnel loss exposure - ANSWERS-any condition or situation that presents the possibility of a
financial loss to a business because of the death, disability, retirement, or resignation of key
employees
Property loss exposure - ANSWERS-any condition or situation that presents the possibility that a
property loss will happen
Risk - ANSWERS-The uncertainty of an outcome - the chance of something happening that will
have an impact on objectives
Terms of likelihood and consequence - ANSWERS-What is risk measured in?
1- physical
2- financial
3- human
4- natural
, 5- intangible
6- reputation / brand - ANSWERS-6 categories of assets
Risk Management - ANSWERS-the process of identifying, assessing and controlling threats to an
organization's capital and earnings. These threats, or risks, could stem from a wide variety of
sources, including financial uncertainty, legal liabilities, strategic management errors, accidents
and natural disasters
1. Risk Identification: Identifying potential losses and their causes
2. Risk Analysis: Estimating the likelihood and expected value of potential losses
3. Designing a strategy: Choosing an appropriate mix of risk control and risk financing
techniques
4. Implementation: Carrying out the details of the plan
5. Review: Monitoring the results of the plan, and considering the impact of internal and
external developments - ANSWERS-Steps in the Risk Management Process
1. Prepare for potential losses in the most economical way
2. Reduce anxiety
3. Meet any external legal obligations
4. Social Responsibility - ANSWERS-Pre-Loss Objectives of Risk Management
-Survival of the firm
-Continue operating
-Stability of earnings
-Continued growth of the firm
-Minimize the effects that a loss will have on other persons and on society - ANSWERS-Post-Loss
Objectives of Risk Management
