CISR Elements of Risk Management Actual Exam Study Guide (Questions with 100% Correct Answers) | Brand New Edition

CISR Elements of Risk Management Actual Exam Study Guide (Questions with 100% Correct Answers) | Brand New Edition 1. 2 Types of Risk - ANSWER 1. Speculative Pure 2. 5 Steps to Risk Management - ANSWER 1. Risk Identification 2. Risk Analysis 3 & 4. Risk Control and Risk Financing Risk Administration 3. moral hazard - ANSWER dishonesty or other behaviors that lead to a loss 4. morale hazard - ANSWER insureds neglect or feel indifferent toward their possessions because losses will be covered 5. true or false: a hazard is a cause of loss - ANSWER false; peril 6. true or false: a situation, behavior or condition that may lead to adverse financial consequences is an exposure - ANSWER true 7. true or false: a cyberattack is an example of an exposure - ANSWER false; peril 8. true or false: a spill on a supermarket aisle is an example of a hazard because it increases the likelihood that someone will fall - ANSWER true 9. true or false: an insured who shows no regard for his insured property demonstrates a morale hazard - ANSWER true 10. incident - ANSWER event that MAY lead to a loss or a claim 11. accident - ANSWER always unexpected and unintentional that tends to result in damage or injury 12. occurrence - ANSWER an "accident" that occurs overtime 13. claim - ANSWER demand for payment or a company's obligation to pay as a result of a loss or occurrence 14. 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. this is an example of: - ANSWER incident 15. a mixing paddle on a faulty bakery mixer snaps and strikes an employee's hand. the employee's hand is cut and bleeding. this is an example of: - ANSWER accident 16. a driver is at fault in a minor auto accident. the other driver is uninjured, but the bumper on her car required repairs. the other driver demands that the at fault driver's insurance co. pay for the loss. this is an example of: - ANSWER claim 17. frequency - ANSWER number of claims that occur or that insurer expects to occur in a given period of time 18. severity - ANSWER aggregate collar amount of all losses in a given period of time 19. severity formula - ANSWER total amount of losses/number of claims = average severity 20. Risk Identification - ANSWER The process in which a risk manager identifies & examines all of an organization's exposures 21. Risk Analysis - ANSWER The step where you asses the potential impact of those exposures from step 1 22. Risk Control - ANSWER This step applies a set of methods or actions intended to minimize or avoid the impact of loss 23. Risk Financing - ANSWER The acquisition of internal & external funds at the most favorable cost to pay losses. Internal funds can be used to pay losses. 24. This solution is called RETENTION and can either be ACTIVE(planned) or PASSIVE (unplanned) 25. Risk Administration - ANSWER This is the ongoing implementation & monitoring of risk management programs, policies, and procedures. 26. 7 General Classes of Risks - ANSWER 1. Economic 2. Legal 3. Physical 4. Social 5. Technological 6. Juridical 7. Political 27. Risk - ANSWER condition of either positive or negative uncertainty arising from a given set of circumstances 28. pure risk - ANSWER chance of loss or no loss 29. speculative risk - ANSWER chance of loss, no loss, or gain 30. loss - ANSWER reduction in asset value 31. exposure - ANSWER situation, practice or condition that MAY lead to a loss 32. peril - ANSWER cause of loss 33. hazard - ANSWER increases the likelihood that a peril will occur 34. physical hazard - ANSWER smoking, spills 35. expected losses - ANSWER an estimate of total losses of a given type of insurance co. can expect in a given period