INTRODUCTION TO RISK
MANAGEMENT EXAM 1 QUESTIONS
AND ANSWERS | 2026 UPDATE | 100%
CORRECT.
Pure risk - ANS uncertainty regarding a loss or event which might induce a loss
in pure risk, losses can be valued in _______ terms - ANS financial
a loss with 100% probability is a ________ ____________ - ANS known loss
is there risk present in a known loss? - ANS no
3 ways to handle a known loss - ANS budget, engage in loss mitigation activities, avoid loss
situation
who is the COO of Marsh and McLennan? - ANS Boris Korchi
a risk map is used to - ANS identify risks the company may face
impact = - ANS severity (y axis)
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,likelihood = - ANS frequency (x axis)
in pure risk, how many possible states are there and what are they? - ANS 2 / loss or no loss
how are losses caused in pure risk? - ANS random events (flood, sickness)
Is pure risk insurable? - ANS yes
in speculative risk, how many possible states are there and what are they? - ANS 3 / loss, gain
or no loss or gain
investments, starting a business, gambling, and developing a product line are all examples of
what type of risk? - ANS speculative risk
true or false
firms face more speculative risk than pure risk. - ANS true
are speculative risks insurable? why or why not - ANS no, it would enable behavior changes
is home ownership a speculative or pure risk? why? - ANS it would be both / there could be a
fire= pure, and it is also an investment= speculative
who is 3rd at Marsh? - ANS Martin Sal
static risk - ANS not going to change significantly over time
natural disasters, floods, fires and theft are all examples of what type of risk? - ANS static risk
dynamic risk - ANS new and emerging risks
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, internet, terrorism, and tax laws are all examples of what type of risk? - ANS dynamic risk
what are the three major types of pure risk that everyone faces? - ANS property, liability,
human capital
human capital - ANS ability to generate income (intellect, talents)
human capital is a source of what kind of pure risk? - ANS personal pure risk
ownership of financial or physical assets is a source of what type of pure risk? - ANS property
pure risk
losses from legal liability is a source of what type of pure risk? - ANS liability pure risk
true or false
not everyone has assets for property and liability pure risk. - ANS false, EVERYONE does
peril, frequency of loss, severity of loss, and hazards are all factors that affect what? -
ANS risk
peril - ANS the immediate cause of a loss, random event that causes a loss or losses to occur
flood, unemployment, accident, theft, and death are all examples of which factor that affects
risk? - ANS peril
frequency of a loss - ANS number of losses in a given time period
true of false
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MANAGEMENT EXAM 1 QUESTIONS
AND ANSWERS | 2026 UPDATE | 100%
CORRECT.
Pure risk - ANS uncertainty regarding a loss or event which might induce a loss
in pure risk, losses can be valued in _______ terms - ANS financial
a loss with 100% probability is a ________ ____________ - ANS known loss
is there risk present in a known loss? - ANS no
3 ways to handle a known loss - ANS budget, engage in loss mitigation activities, avoid loss
situation
who is the COO of Marsh and McLennan? - ANS Boris Korchi
a risk map is used to - ANS identify risks the company may face
impact = - ANS severity (y axis)
@COPYRIGHT ALL RIGHTS RESERVED PAGE 1 OF 18
,likelihood = - ANS frequency (x axis)
in pure risk, how many possible states are there and what are they? - ANS 2 / loss or no loss
how are losses caused in pure risk? - ANS random events (flood, sickness)
Is pure risk insurable? - ANS yes
in speculative risk, how many possible states are there and what are they? - ANS 3 / loss, gain
or no loss or gain
investments, starting a business, gambling, and developing a product line are all examples of
what type of risk? - ANS speculative risk
true or false
firms face more speculative risk than pure risk. - ANS true
are speculative risks insurable? why or why not - ANS no, it would enable behavior changes
is home ownership a speculative or pure risk? why? - ANS it would be both / there could be a
fire= pure, and it is also an investment= speculative
who is 3rd at Marsh? - ANS Martin Sal
static risk - ANS not going to change significantly over time
natural disasters, floods, fires and theft are all examples of what type of risk? - ANS static risk
dynamic risk - ANS new and emerging risks
@COPYRIGHT ALL RIGHTS RESERVED PAGE 2 OF 18
, internet, terrorism, and tax laws are all examples of what type of risk? - ANS dynamic risk
what are the three major types of pure risk that everyone faces? - ANS property, liability,
human capital
human capital - ANS ability to generate income (intellect, talents)
human capital is a source of what kind of pure risk? - ANS personal pure risk
ownership of financial or physical assets is a source of what type of pure risk? - ANS property
pure risk
losses from legal liability is a source of what type of pure risk? - ANS liability pure risk
true or false
not everyone has assets for property and liability pure risk. - ANS false, EVERYONE does
peril, frequency of loss, severity of loss, and hazards are all factors that affect what? -
ANS risk
peril - ANS the immediate cause of a loss, random event that causes a loss or losses to occur
flood, unemployment, accident, theft, and death are all examples of which factor that affects
risk? - ANS peril
frequency of a loss - ANS number of losses in a given time period
true of false
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