CFP 512 Exam Comprehensive
Verified Exam Questions and Answers Latest update 2026/2027
Question:
Difference between risk, peril and hazard -
Answer:
A risk represente the
possibly of a loss or a negative deviation from a desires outcome. A peril is the cause of that loss,
while a hazard increases the potential for loss.
Question:
Static Risk -
Answer:
Results from factors other than changes in the
economy (earthquake, floods, etc). They tend to occur with regularity and can be insured.
Question:
Dynamic risks -
Answer:
They are the result of changes in the economy
(business cycle, inflation, etc). Insurance does not typically cover dynamic risks.
Question:
Fundamental Risk -
Answer:
risk that can affect many people at once
(earthquake, terrorism)
Question:
Particular Risk -
Answer:
risks that effect individuals / a small group of
people at a given time.
Question:
Pure Risk -
Answer:
A chance of loss or no loss, but no chance of gain.
, Question:
Speculative Risk -
Answer:
Chance of loss or gain
Question:
Risk Control -
Answer:
techniques that reduce the frequency or severity of
losses
Question:
Risk Avoidance -
Answer:
A type of risk control where risk is avoided. If
you do not want a window broken, don't have windows.
Question:
Risk Reduction -
Answer:
finding ways to lower your chance of incurring a
loss
Question:
Risk Financing -
Answer:
A risk management technique that provides for
payment of losses after they occur
Question:
Risk Rentention -
Answer:
Small risk that are planed to be covered by out of
pocket.
Question:
Risk Transfer -
Answer:
Primarily by insurance, but can be accomplished
through waivers and subcontracting.
Verified Exam Questions and Answers Latest update 2026/2027
Question:
Difference between risk, peril and hazard -
Answer:
A risk represente the
possibly of a loss or a negative deviation from a desires outcome. A peril is the cause of that loss,
while a hazard increases the potential for loss.
Question:
Static Risk -
Answer:
Results from factors other than changes in the
economy (earthquake, floods, etc). They tend to occur with regularity and can be insured.
Question:
Dynamic risks -
Answer:
They are the result of changes in the economy
(business cycle, inflation, etc). Insurance does not typically cover dynamic risks.
Question:
Fundamental Risk -
Answer:
risk that can affect many people at once
(earthquake, terrorism)
Question:
Particular Risk -
Answer:
risks that effect individuals / a small group of
people at a given time.
Question:
Pure Risk -
Answer:
A chance of loss or no loss, but no chance of gain.
, Question:
Speculative Risk -
Answer:
Chance of loss or gain
Question:
Risk Control -
Answer:
techniques that reduce the frequency or severity of
losses
Question:
Risk Avoidance -
Answer:
A type of risk control where risk is avoided. If
you do not want a window broken, don't have windows.
Question:
Risk Reduction -
Answer:
finding ways to lower your chance of incurring a
loss
Question:
Risk Financing -
Answer:
A risk management technique that provides for
payment of losses after they occur
Question:
Risk Rentention -
Answer:
Small risk that are planed to be covered by out of
pocket.
Question:
Risk Transfer -
Answer:
Primarily by insurance, but can be accomplished
through waivers and subcontracting.
