CAIB 1 - General
Questions Chapter 1
Comprehensive Questions
(Frequently Tested) with
Verified Answers Graded
A+
[Document subtitle]
[DATE]
[COMPANY NAME]
[Company address]
, Contact for further consultation
1. List the 3 categories of risk generally faced by people. Answer: 1)
Personal Risk
2) Property Risk
3) Liability Risk
2. State 4 possible options people can choose to deal with risk.
(explain each and example) Answer: 1) Risk Avoidance - "not doing something" in such
cause there is kot chance of loss. ex: Renting vs. owning property
2) Risk Control - taking measures to reduce the frequency and severity of losses. ex Answer: fire detection
alarms
3) Risk Retention - bigger companies can often assume financial responsibility for their own losses. Not
many people can attord to do this and may opt to only self insure a portion of their policy. ex Answer: insuring
for all property losses, excluding glass breakage
4) Risk Transfer - people unable to withstand a financial loss look to transfer all or a portion of this
risk. ex Answer: Insurance (most practical means of dealing with risk)
3. Give 2 examples of loss control measures that can be taken to
, Contact for further consultation
reduce the frequency and severity of losses. Answer: 1) Installing intrusion
detection equipment
2) Fire detection alarms
4. State 2 reasons why loss control measures are not a total solution
in eliminat- ing financial loss. Answer: 1) Equipment will not work 100% of the time
2) Certain types of losses such as wind, hail and lightning cannot be ettectively controlled
5. Which of the four possible options is generally not an effective
means of dealing with risk? Answer: Risk Avoidance
6. Which of the four possible options is the most popular and
practical means of dealing with risk? Answer: Transfer of Risk
7. Explain using an example, "speculative risk" Answer: Placing a bet at a
blackjack table in Las Vegas, there is a chance of financial loss but also a chance of financial
gain.
8. Explain using an example, "pure risk" Answer: Owning and operating an
automobile, there is no chance in financial gain only financial loss if there were to be a loss or
damage.
Questions Chapter 1
Comprehensive Questions
(Frequently Tested) with
Verified Answers Graded
A+
[Document subtitle]
[DATE]
[COMPANY NAME]
[Company address]
, Contact for further consultation
1. List the 3 categories of risk generally faced by people. Answer: 1)
Personal Risk
2) Property Risk
3) Liability Risk
2. State 4 possible options people can choose to deal with risk.
(explain each and example) Answer: 1) Risk Avoidance - "not doing something" in such
cause there is kot chance of loss. ex: Renting vs. owning property
2) Risk Control - taking measures to reduce the frequency and severity of losses. ex Answer: fire detection
alarms
3) Risk Retention - bigger companies can often assume financial responsibility for their own losses. Not
many people can attord to do this and may opt to only self insure a portion of their policy. ex Answer: insuring
for all property losses, excluding glass breakage
4) Risk Transfer - people unable to withstand a financial loss look to transfer all or a portion of this
risk. ex Answer: Insurance (most practical means of dealing with risk)
3. Give 2 examples of loss control measures that can be taken to
, Contact for further consultation
reduce the frequency and severity of losses. Answer: 1) Installing intrusion
detection equipment
2) Fire detection alarms
4. State 2 reasons why loss control measures are not a total solution
in eliminat- ing financial loss. Answer: 1) Equipment will not work 100% of the time
2) Certain types of losses such as wind, hail and lightning cannot be ettectively controlled
5. Which of the four possible options is generally not an effective
means of dealing with risk? Answer: Risk Avoidance
6. Which of the four possible options is the most popular and
practical means of dealing with risk? Answer: Transfer of Risk
7. Explain using an example, "speculative risk" Answer: Placing a bet at a
blackjack table in Las Vegas, there is a chance of financial loss but also a chance of financial
gain.
8. Explain using an example, "pure risk" Answer: Owning and operating an
automobile, there is no chance in financial gain only financial loss if there were to be a loss or
damage.
