CPCU 500 Exam | Questions with 100% Correct
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Terms in this set (151)
Economy of Operations increase departmental and organizational
efficiency, pre-loss risk mgmt goal
Toerable uncertainty provide an awareness of potential losses and an
assurance of their effective management keeping
the worry of accidental loss at a tolerable level
(pre-loss risk mgmt goal)
Survival resume operations eventually (post loss risk mgmt
goal)
Continuity of operations resume operations quickly (post loss risk mgmt
goal)
Profitability maintain at least a minimum profit level NO
MATTER WHAT accident occurs. Post loss risk
mgmt goals
Earnings stability maintain a specified earnings level from year to
year post loss rm goal
Minimize the effects of loss on social responsibility
society for moral and good public
reasons
,maintain the pre-loss growth pattern growth post loss rm goal
6 STEPS OF THE RM PROCESS 1) IDENTIFY EXPOSURES
2) ANALYZE (MEASURE) LOSS EXPOSURES
3) EVALUATE ALTERNATIVE RM EXPOSURE
TREATMENT TECHNIQUES
4) SELECT THE BEST COMBINATION OF RM
TECHNIQUES
5) IMPLEMENT DECISION
6) MONITOR THE PROGRAM
4 methods of loss exposure 1) Document analysis
identification 2) Compliance review
3) Personal inspections
4) Experts
Hazard analysis under the experts method of loss exposures
identification, reveals potential losses by IDing
conditions that increase expected loss frequency
and/or severity
Probability measures the expected frequency of an event over
time in a stable environment
Impossible events have a probability 0
of
Certain events have a probability of 1
Theoretical probability theoretical and constant, calculated without actual
trials (coin toss)
, Empirical probability practical and changeable, the law of large numbers
applies
Empirical probability computed from historical data from study samples
(mortality rates)
Factors that improve the reliability of use of a large number of data, an organization with
empirical probabilities: stable operations and loss patterns
The smaller the standard deviation, the smaller the degree of dispersion and the
greater the accuracy of predictions.
Risk managers use standard the confidence in projecting losses
deviation to measure
Coefficient of variation compares the degree of dispersion between 2 data
sets w/ substantially different means
equals the std dev/mean
2 dimensions of timing when losses occur
when payments are made
The Prouty Approach method of jointly analyzing the frequency and
severity of a loss exposure
evaluates the significance of a particular loss
exposure in terms of possible combinations of
expected loss frequency and severity
Answers | Verified | Latest Update 2026/2027
Save
Terms in this set (151)
Economy of Operations increase departmental and organizational
efficiency, pre-loss risk mgmt goal
Toerable uncertainty provide an awareness of potential losses and an
assurance of their effective management keeping
the worry of accidental loss at a tolerable level
(pre-loss risk mgmt goal)
Survival resume operations eventually (post loss risk mgmt
goal)
Continuity of operations resume operations quickly (post loss risk mgmt
goal)
Profitability maintain at least a minimum profit level NO
MATTER WHAT accident occurs. Post loss risk
mgmt goals
Earnings stability maintain a specified earnings level from year to
year post loss rm goal
Minimize the effects of loss on social responsibility
society for moral and good public
reasons
,maintain the pre-loss growth pattern growth post loss rm goal
6 STEPS OF THE RM PROCESS 1) IDENTIFY EXPOSURES
2) ANALYZE (MEASURE) LOSS EXPOSURES
3) EVALUATE ALTERNATIVE RM EXPOSURE
TREATMENT TECHNIQUES
4) SELECT THE BEST COMBINATION OF RM
TECHNIQUES
5) IMPLEMENT DECISION
6) MONITOR THE PROGRAM
4 methods of loss exposure 1) Document analysis
identification 2) Compliance review
3) Personal inspections
4) Experts
Hazard analysis under the experts method of loss exposures
identification, reveals potential losses by IDing
conditions that increase expected loss frequency
and/or severity
Probability measures the expected frequency of an event over
time in a stable environment
Impossible events have a probability 0
of
Certain events have a probability of 1
Theoretical probability theoretical and constant, calculated without actual
trials (coin toss)
, Empirical probability practical and changeable, the law of large numbers
applies
Empirical probability computed from historical data from study samples
(mortality rates)
Factors that improve the reliability of use of a large number of data, an organization with
empirical probabilities: stable operations and loss patterns
The smaller the standard deviation, the smaller the degree of dispersion and the
greater the accuracy of predictions.
Risk managers use standard the confidence in projecting losses
deviation to measure
Coefficient of variation compares the degree of dispersion between 2 data
sets w/ substantially different means
equals the std dev/mean
2 dimensions of timing when losses occur
when payments are made
The Prouty Approach method of jointly analyzing the frequency and
severity of a loss exposure
evaluates the significance of a particular loss
exposure in terms of possible combinations of
expected loss frequency and severity
