CAIB 1 – questions with correct answers
Define "Risk" - Answer The chance of a financial loss to which the object of insurance may be exposed to List 3 Categories of Risk - Answer 1) Personal 2) Property 3) Liability List 4 Types of Risk Management Techniques - Answer 1) Risk Avoidance 2) Risk Retention 3) Risk Control 4) Risk Transfer Define "Risk Avoidance" - Answer To avoid doing something in order to eliminate the chance of risk Define "Risk Retention" - Answer To self-insure or to pay for losses themselves Define "Risk Control" - Answer To reduce the frequency or severity of the loss Define "Risk Transfer" - Answer To shift the financial obligation to someone better equipped to handle it (an insurance company) List 2 Types of Risks - Answer 1) Speculative Risk 2) Pure Risk Define "Speculative Risk" - Answer Chance of Financial Loss or Financial Gain Define "Pure Risk" - Answer Chance of Financial Loss only
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