Quiz_________________?
"Step Three" in the risk management process involves the selection of risk management
techniques. After various risk control and risk financing options have been determined the
organization must decide on the best combination that will achieve the organization's
objectives. Selection of the risk management techniques is based on forecasting and the
application of the selection criteria.
a) The organization must conduct three forecasts. Indicate the nature of these forecasts -
Answers✅
1. Involves the frequency and severity of losses that can be expected.
2. measures the effects that various risk control and risk financing techniques are likely to
have on the frequency, severity and predictability of those projected losses.
3. forecast of the costs of these techniques.
Quiz_________________?
a) Indicate if the following businesses are candidates for S.P.F. No. 4 Standard Garage
Automobile Policy; state YES or NO.
I. One of the accounts is an up-scale night club that offers a valet service to its customers so
that they don't have to drive around looking for a parking place for their vehicle.
1
, II. Another is a retailer of car audio and visual systems, which they also install in their
customers' vehicles.
III. A third account is a custom upholstery shop which recovers car seats and benches
brought by customers who are restoring vintage and collectors' vehicles. -
Answers✅
I. YES; II. YES; III. NO
Quiz_________________?
b) A Draft is only one of the methods of payment for goods in international trade.
i. Explain when Cash in Advance would be used by the seller, and at what point the seller's
interest in the goods ceases.
ii. Indicate how a buyer would pay for goods under an Open Account and why a seller
might agree to this method of payment. -
Answers✅
i. Cash in Advance is used when the buyer is not well known to the seller or when the
products are custom manufactured or of a type for which no ready market exists. With this
method of payment the seller's insurable interest ceases from the moment the payment has
been made.
ii. Open Account is a charge account, where the buyer arranges settlement at regular
intervals, usually monthly or quarterly, as agreed upon by the seller. This arrangement is
made for very reliable customers and, as a general rule only in connection with goods that
have a ready market.
Quiz_________________?
b) Explain how the financial consequences of a loss can be measured -
2
, Answers✅
measured according to the likelihood of a loss occurring which is the frequency combined
with the seriousness or severity of losses that could occur.
Quiz_________________?
b) Explain the benefits of suretyship gained by both the principal and the obligee -
Answers✅
Principal gain confidence by the fact that the surety is satisfied with their ability to carry out
the required task. The guarantee of performance by the surety gives the obligee the
necessary confidence to undertake various projects.
Quiz_________________?
b) How can businesses that don't have a good data base of their own loss experience still
arrive at a realistic forecast? -
Answers✅
By using probability analysis and trend analysis future losses can be predicted with some
certainty.
Quiz_________________?
b) How does the Insurer measure the loss under ocean marine cargo insurance? -
Answers✅
The loss is measured in terms of Percentage of Insured Value Lost.
Quiz_________________?
b) Identify and briefly explain the two dimensions of the risk management process. -
Answers✅
3
"Step Three" in the risk management process involves the selection of risk management
techniques. After various risk control and risk financing options have been determined the
organization must decide on the best combination that will achieve the organization's
objectives. Selection of the risk management techniques is based on forecasting and the
application of the selection criteria.
a) The organization must conduct three forecasts. Indicate the nature of these forecasts -
Answers✅
1. Involves the frequency and severity of losses that can be expected.
2. measures the effects that various risk control and risk financing techniques are likely to
have on the frequency, severity and predictability of those projected losses.
3. forecast of the costs of these techniques.
Quiz_________________?
a) Indicate if the following businesses are candidates for S.P.F. No. 4 Standard Garage
Automobile Policy; state YES or NO.
I. One of the accounts is an up-scale night club that offers a valet service to its customers so
that they don't have to drive around looking for a parking place for their vehicle.
1
, II. Another is a retailer of car audio and visual systems, which they also install in their
customers' vehicles.
III. A third account is a custom upholstery shop which recovers car seats and benches
brought by customers who are restoring vintage and collectors' vehicles. -
Answers✅
I. YES; II. YES; III. NO
Quiz_________________?
b) A Draft is only one of the methods of payment for goods in international trade.
i. Explain when Cash in Advance would be used by the seller, and at what point the seller's
interest in the goods ceases.
ii. Indicate how a buyer would pay for goods under an Open Account and why a seller
might agree to this method of payment. -
Answers✅
i. Cash in Advance is used when the buyer is not well known to the seller or when the
products are custom manufactured or of a type for which no ready market exists. With this
method of payment the seller's insurable interest ceases from the moment the payment has
been made.
ii. Open Account is a charge account, where the buyer arranges settlement at regular
intervals, usually monthly or quarterly, as agreed upon by the seller. This arrangement is
made for very reliable customers and, as a general rule only in connection with goods that
have a ready market.
Quiz_________________?
b) Explain how the financial consequences of a loss can be measured -
2
, Answers✅
measured according to the likelihood of a loss occurring which is the frequency combined
with the seriousness or severity of losses that could occur.
Quiz_________________?
b) Explain the benefits of suretyship gained by both the principal and the obligee -
Answers✅
Principal gain confidence by the fact that the surety is satisfied with their ability to carry out
the required task. The guarantee of performance by the surety gives the obligee the
necessary confidence to undertake various projects.
Quiz_________________?
b) How can businesses that don't have a good data base of their own loss experience still
arrive at a realistic forecast? -
Answers✅
By using probability analysis and trend analysis future losses can be predicted with some
certainty.
Quiz_________________?
b) How does the Insurer measure the loss under ocean marine cargo insurance? -
Answers✅
The loss is measured in terms of Percentage of Insured Value Lost.
Quiz_________________?
b) Identify and briefly explain the two dimensions of the risk management process. -
Answers✅
3
