CISR - Elements of Risk Management Exam 132 Questions with Answers,100% CORRECT

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CISR - Elements of Risk Management Exam 132 Questions with Answers A ____ is a cause of loss - CORRECT ANSWER peril A situation, behavior, or condition that may lead to adverse financial cons... equences - CORRECT ANSWER exposure A cyberattack is an example of a ____ - CORRECT ANSWER peril An Insured who shows no regard for his insured property demonstrates a - CORRECT ANSWER morale hazard A spill on a supermarket aisle is an example of a ____ because it increases the likelihood that someone will fall - CORRECT ANSWER hazard A passenger enters an elevator. His clothing is caught in the elevator door as the door closes. The passenger snatches the clothing from the door before the elevator begins to move. He is uninjured and his clothes are not damaged. - CORRECT ANSWER incident A mixing paddle on a faulty bakery mixer snaps and strikes an employee's hand. The employee's hand is cut and bleeding - CORRECT ANSWER accident A driver is at fault in a minor auto accident. The other driver is uninjured, but the bumper on her car requires repairs. The other driver demands that the at-fault driver's insurance company pay for the loss. - CORRECT ANSWER claim The total dollar amount of all losses for a given period of time - CORRECT ANSWER severity A loss has occurred but is unlikely to occur again in the future - CORRECT ANSWER low frequency An organization's tolerance for risk - CORRECT ANSWER risk appetite The product of loss frequency multiplied by loss severity - CORRECT ANSWER expected losses The total amount of losses in a given period divided by the total number of claims - CORRECT ANSWER average severity A loss expected to continue occurring regularly - CORRECT ANSWER high frequency A cause of loss - CORRECT ANSWER peril An unplanned event definite as to time and place that results in injury or damage to a person or property - CORRECT ANSWER accident An event that disrupts normal activities and may become a loss or business interruption - CORRECT ANSWER incident A demand for payment or an obligation to pay as a result of a loss or occurrence - CORRECT ANSWER claim A situation, practice, or condition that may lead to an adverse financial consequence or loss; an activity or resource; people or assets - CORRECT ANSWER exposure A reduction in value - CORRECT ANSWER loss An accident with the limitation of time removed; an "accident" extended over a period of time rather than a single, observable event - CORRECT ANSWER occurrence A condition or characteristic that may create or increase the likelihood or severity of a loss - CORRECT ANSWER hazard A response to a focus on the frequency with which events occur - CORRECT ANSWER Prevention The isolation of an exposure from other exposures, perils, or hazards - CORRECT ANSWER Segregation Creating asset back-ups - CORRECT ANSWER Duplication A response to a focus on the severity of incidents in an effort to recognize risk and take action to lower losses - CORRECT ANSWER Reduction The shift of function, exposure, or responsibility of certain liabilities to another party - CORRECT ANSWER Transfer The elimination of risk - CORRECT ANSWER Avoidance The process of spreading exposures or activities over several locations - CORRECT ANSWER Separation Risk is defined as a condition of either positive or negative ____ arising from a given set of circumstances - CORRECT ANSWER uncertainty Perceptions of risk depend upon an individual's job function or area of expertise. - CORRECT ANSWER True A risk manager may define risk as the person or property exposed to a potential loss - CORRECT ANSWER True Pure risks include threats to property and people, as well as ___ - CORRECT ANSWER Liability The result of a pure risk is some _____ - CORRECT ANSWER Measure of Loss Unlike pure risk, _____ presents the opportunity for gain - CORRECT ANSWER Speculative Risk Speculative risk is associated with _____ or _____ risk. - CORRECT ANSWER Business, Financial A situation, practice, or condition that may lead to an insured's susceptibility to adverse financial consequences or loss is called a(n) - CORRECT ANSWER exposure A ____ is a cause of loss - CORRECT ANSWER peril A(n) ____ is a factor that increases the likelihood that a peril will occur. - CORRECT ANSWER hazard A(n) _____ is an event that may lead to a loss or a claim, or an event that may cause a business interruption - CORRECT ANSWER Incident A(n) _____ is always an unexpected and unintentional event that tends to result in damage or injury. - CORRECT ANSWER Accident An "accident" that occurs over an extended period of time is called a(n) _____ - CORRECT ANSWER occurrence The number of claims that occur or that an insurer expects to occur within a given period of time is labeled _____ - CORRECT ANSWER frequency The dollar amount inflicted by a given loss or catastrophe, or the aggregate dollar amount of all losses for a given period of time, is defined by the word _____ - CORRECT ANSWER severity _____ describes an organization's ability or inability to assume financial responsibility for loss - CORRECT ANSWER Risk Ability _______ is the implementation of a process intended to minimize the uncertainty of exposures that can adversely affect an individual's or an organization's assets and financial well-being - CORRECT ANSWER Risk Management Steps of the Risk Management Process - CORRECT ANSWER 1. Risk Identification 2. Risk Analysis 3. Risk Control 4. Risk Financing 5. Risk Administration The best method of risk control is ______, or the elimination of risk. - CORRECT ANSWER avoidance ______ involves isolating an exposure from other exposures, perils, or hazards. - CORRECT ANSWER Segregation The two types of risk transfer are ____ and ____ - CORRECT ANSWER Physical, Contractual The ongoing implementation and monitoring of the risk management process management process is called _____ - CORRECT ANSWER Risk Administration Checklists are efficient means of covering all areas of an operation. - CORRECT ANSWER False Risk management surveys are more effective at the company or event level because they reveal more industry-specific information. - CORRECT ANSWER True Examination of an organization's financial information to identify and value its exposures/assets - CORRECT ANSWER Financial statement analysis A graphical depiction of a process or system - CORRECT ANSWER Flowchart construction Contributions from experienced individuals in the identification of exposures - CORRECT ANSWER Expert review Systematic searches for as many exposures, perils, and hazards as possible - CORRECT ANSWER Checklists, surveys, and questionnaires Visits to physical sites to identify exposures to risk - CORRECT ANSWER Physical inspection Historical examination of exposures and their valuations - CORRECT ANSWER Loss data analysis Identification of contractual obligations and examination of contractual compliance - CORRECT ANSWER Contract review Determination of an organization's adherence to laws and regulations - CORRECT ANSWER Compliance review Examination of current policies and procedures for the purpose of identifying exposures - CORRECT ANSWER Procedures and policies review Identification of exposures and perils arising from insurance coverage gaps, insufficient limits, coverage limitations, and exclusions - CORRECT ANSWER Insurance policy review 1. The potential for several buildings to be damaged by heavy winds within the geographical area nicknamed "Tornado Alley" is an example of a(n) - CORRECT ANSWER exposure Tornadoes that frequently occur within Tornado Alley represent a(n) - CORRECT ANSWER peril An older building that was engineered only to withstand winds of less than 110 miles per hour, or a tornado in the EF1 damage category, is an example of a(n) - CORRECT ANSWER hazard The most obvious result of overlooking the Risk Identification step in the risk management process is an increased likelihood of - CORRECT ANSWER financial loss Monetary exchange rates, inflation rates, and import-export tariffs are examples of risks in which general class of risk? - CORRECT ANSWER economic Government regulation, new legislation, and compliance are examples of risks in which general class of risk? - CORRECT ANSWER legal Fire and water damage, earthquake damage, and bodily injury are examples of risks in which general class of risk? - CORRECT ANSWER physical The loss of reputation, brand damage, and social trends are examples of risks in which general class of risk? - CORRECT ANSWER social Lost data and disruption to service or online access are examples of risks in which general class of risk? - CORRECT ANSWER technological Legal costs and legal decisions are examples of risks in which general class of risk? - CORRECT ANSWER juridical Trade agreements, legislation, and social unrest are examples of risks in which general class of risk? - CORRECT ANSWER political ___ property can be seen or touched and includes real property like buildings and personal property, such as equipment. - CORRECT ANSWER Tangible Patents and intellectual property are examples of ____ property. - CORRECT ANSWER intangible _____ are an organization's internal people exposure - CORRECT ANSWER Human resources In the risk identification method, _____ analysis, risk managers examine historical information and data to identify exposures and their valuations. - CORRECT ANSWER loss data ____ are useful for understanding product development processes, decision making processes, architectural site analyses, and scheduling processes. - CORRECT ANSWER Flowcharts An organization conducts a(n) _____ review to determine how well it complies with regulations and laws, which may be statutory, state, or federal. - CORRECT ANSWER compliance Validation and refinement of loss data allow for the ____ of risk factors. - CORRECT ANSWER prioritization A risk manager uses a(n) ____ analysis to systematically drill down to the cause of an incident - CORRECT ANSWER root cause This word is used interchangeably with the word "incident." A(n) ___ is an incident that may or may not become a claim. - CORRECT ANSWER event _____ is the chance something will happen. It is also known as frequency - CORRECT ANSWER Likelihood _____ describes the impact of an event, should that event occur - CORRECT ANSWER Severity A risk manager carries out ______ to seek information that is initially difficult to measure mathematically - CORRECT ANSWER qualitative analysis ______ is a visual analytical tool that identifies all risks to an organization and indicates their frequency, on a scale from low to high, and their potential impact, or severity, on a scale from low to high - CORRECT ANSWER Risk mapping ____ is a visual representation of complex sets of data interpretations that uses colors to indicate patterns or groupings of how risk will impact an organization - CORRECT ANSWER Heat mapping The head of a "fish" is the identified problem, incident, or accident in a(n) ____ - CORRECT ANSWER Ishikawa diagram _____ use historical loss data to predict future risk frequency and severity - CORRECT ANSWER Loss projections A(n) _____ analysis measures total anticipated benefits after costs are subtracted - CORRECT ANSWER cost-benefit A(n) risk manager who conducts a ____ analysis calculates the sum of all costs and expenses associated with risks and risk management within an organization. - CORRECT ANSWER TCOR ______ takes historical data (losses) and converts that loss data to current dollar amounts - CORRECT ANSWER Loss trending ______ is the process by which data are adjusted to account for lag time to settle claims, recognize frequency development, acknowledge incurred but not reported (IBNR) accidents, and the index for inflation, or a calculation of the rate of inflation in an economy - CORRECT ANSWER Loss development An ice cream start-up builds a second walk-in freezer in its warehouse - CORRECT ANSWER Duplication A car dealership sells its sports utility vehicles from its suburban lot and its compact and hybrid cars from its downtown location. - CORRECT ANSWER Separation A waste management company establishes a compost facility at a site separate from its landfill facility to prevent contamination. - CORRECT ANSWER Segregation A machine shop requires employees to use personal safety equipment while they are using the shop's drill presses - CORRECT ANSWER prevention A large retail company installs a fire suppression system. - CORRECT ANSWER loss reduction After there are several reported cases of babies swallowing ornaments decorating a crib mobile, the manufacturer ends production of the mobile. - CORRECT ANSWER avoidance Risk ____ is the complete elimination of an exposure to avoid the chance of loss - CORRECT ANSWER avoidance An action intended to interrupt a sequence of events that lead to loss is called - CORRECT ANSWER prevention ____ is an action taken to minimize the severity, or budgetary impact, of an unprevented loss - CORRECT ANSWER Loss reduction An action intended to isolate an exposure from other exposures, perils, or hazards is called - CORRECT ANSWER segregation The establishment of backups for critical systems or operations is called - CORRECT ANSWER duplication Movement of some or all risk to another party is called - CORRECT ANSWER transfer Responsibility for certain liabilities moves to another party in a(n) ___ transfer - CORRECT ANSWER contractual A(n) ____ agreement is an arrangement whereby one party assumes the liability inherent in a situation, thereby relieving another party of that liability - CORRECT ANSWER hold harmless A(n) ____ clause is a pre-event limitation of the amount, type, or method of calculation of damages available by one or both parties to an agreement - CORRECT ANSWER limit of liability common root causes of accidents - CORRECT ANSWER Unsafe acts or behaviors • Lack of awareness • Lack of or insufficient training • Unsafe conditions • Uncontrollable events A consideration in exchange for a promise of indemnification - CORRECT ANSWER premium susceptibility to loss - CORRECT ANSWER exposure A transferee that takes contractual responsibility for the financial consequence of a risk - CORRECT ANSWER the insurer A transferor with a relationship with a transferee - CORRECT ANSWER the insured A promise of indemnification for specified losses in exchange for payment of premium - CORRECT ANSWER insurance The insured reimburses the insurer a portion of each loss up to a stated amount. - CORRECT ANSWER Deductible Plan The reimbursement from an insurance carrier when an organization experiences a good year in terms of losses - CORRECT ANSWER Dividend Plan A fully insured program that transfers all risk of loss to an insurance company - CORRECT ANSWER Guaranteed Cost Plan The use of internal funds to cover possible losses and possibly external funds through reinsurance or excess coverage - CORRECT ANSWER Self-Insured Risk Financing Plan The acquisition of funds at the most favorable or optimal cost to pay losses is called - CORRECT ANSWER risk financing The use of internal funds to pay losses is called - CORRECT ANSWER retention The use of external funds to pay losses is called a(n) ___ of financial responsibility - CORRECT ANSWER transfer A(n) ____ takes contractual responsibility for the financial consequence of a risk. - CORRECT ANSWER insurer Insurance carriers that are considered ___ are admitted and licensed by the states in which they operate. - CORRECT ANSWER standard A(n) ___ or transfer diagram depicts an organization's financial ability and risk appetite - CORRECT ANSWER retention ___ retention is the portion of expected losses an organization is willing and able to retain - CORRECT ANSWER Budgeted In a(n) ___ risk financing plan, an insured elects to reimburse an insurer for losses up to a stated amount - CORRECT ANSWER deductible Insurance is a transfer of risk - CORRECT ANSWER false Implementation of a risk management plan relies heavily on the risk manager's control of an organization's resources - CORRECT ANSWER false The two parts of the final step in the risk management process are ___ and ___ - CORRECT ANSWER implementation, monitoring To achieve their objectives, risk managers require contributions from both ___ and ___ networks of people. - CORRECT ANSWER internal, external To select network members who will be the best fit for their organizations, risk managers consider a person's ___, such as interpersonal skills - CORRECT ANSWER personal attributes [Show More]

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