CGFO - FINANCIAL ADMINISTRATION
EXAM 2024/2025
According to GASB 10, list the types of risk - Precise Answer ✔✔Torts
Theft of damage to, or destruction of assets
Business interuption
Errors or omissions
Job-related illnesses or injuries to employees
Acts of God
Any other risk of loss assumed under a policy or participation contract issued by a public entity risk pool
Risk of loss resulting when an entity agrees to provide accident and health, dental, and other medical
benefits to its employees.
What are the two ways to mange risk? - Precise Answer ✔✔Manage an organization's activities to
minimize adverse effects of certain types of losses
Mitigate risk by purchasing insurance.
What are three reasons to manage risk? - Precise Answer ✔✔Create a safe workplace
Prevent financial losses
Provide stability (budget)
What are the three approaches to managing operational and financial risk> - Precise Answer
✔✔Investment portfolio policies (long-term and short-term)
Diversification strategies (spread risk)
Custody of assets (procedures)
What are 7 sources of risk? - Precise Answer ✔✔Physical
Legal
,Operational
Political
Social
Economic
Cognitive (I.T. hack)
What are three tools to minimize risk? - Precise Answer ✔✔Risk transfer - shift the burden to another,
purchase insurance, or risk pool, level premiums for budget
Risk retention - assume risk responsibilities internally
Risk avoidance - Do not provide service
What are the four parts of a Risk Management Program? - Precise Answer ✔✔Risk Identification
Risk evaluation
Risk treatment
Implementation
In the case of Risk Retention, if claims are greater than premiums = (Gain or Loss) - Precise Answer
✔✔Loss
In the case of Risk Retention, if claims are less than premiums = (Gain or Loss) - Precise Answer ✔✔Gain
What is the advantages of Risk Retention? - Precise Answer ✔✔Lower premiums
Align incentives
Create a safer work environment
What are the advantages of participating in a Risk Pool? - Precise Answer ✔✔Vehicle for government to
pool funds.
Affordable cost through economies of scale
Provide services to reduce risk
, Risk Pool - Premium = - Precise Answer ✔✔Revenue
Define IBNR - Precise Answer ✔✔Incurred but not reported claims
When is IBNR recorded? - Precise Answer ✔✔Record when event triggers coverage under policy
What amount is IBNR recorded? - Precise Answer ✔✔Amount based on estimate to settle claim.
How is IBNR recorded? - Precise Answer ✔✔As an accrual based on probable loss that can be reasonably
estimated, recoreded as an expense/liability.
How do we minimize risk? - Precise Answer ✔✔Provide safety in the workplace
Inspect buildings
Install extinquishers, sprinklers, smoke detectors
Training
What three areas should we monitor for risks? - Precise Answer ✔✔One-time projects
Geography (example: stormwater)
Unique Services
What should a Risk Management Committee accomplish? - Precise Answer ✔✔Create a Risk
Management policy
Develop inspection programs
Design safety
Create claims investigation system
Identify safety measures
Develop disciplinary procedures
Establish review boards
EXAM 2024/2025
According to GASB 10, list the types of risk - Precise Answer ✔✔Torts
Theft of damage to, or destruction of assets
Business interuption
Errors or omissions
Job-related illnesses or injuries to employees
Acts of God
Any other risk of loss assumed under a policy or participation contract issued by a public entity risk pool
Risk of loss resulting when an entity agrees to provide accident and health, dental, and other medical
benefits to its employees.
What are the two ways to mange risk? - Precise Answer ✔✔Manage an organization's activities to
minimize adverse effects of certain types of losses
Mitigate risk by purchasing insurance.
What are three reasons to manage risk? - Precise Answer ✔✔Create a safe workplace
Prevent financial losses
Provide stability (budget)
What are the three approaches to managing operational and financial risk> - Precise Answer
✔✔Investment portfolio policies (long-term and short-term)
Diversification strategies (spread risk)
Custody of assets (procedures)
What are 7 sources of risk? - Precise Answer ✔✔Physical
Legal
,Operational
Political
Social
Economic
Cognitive (I.T. hack)
What are three tools to minimize risk? - Precise Answer ✔✔Risk transfer - shift the burden to another,
purchase insurance, or risk pool, level premiums for budget
Risk retention - assume risk responsibilities internally
Risk avoidance - Do not provide service
What are the four parts of a Risk Management Program? - Precise Answer ✔✔Risk Identification
Risk evaluation
Risk treatment
Implementation
In the case of Risk Retention, if claims are greater than premiums = (Gain or Loss) - Precise Answer
✔✔Loss
In the case of Risk Retention, if claims are less than premiums = (Gain or Loss) - Precise Answer ✔✔Gain
What is the advantages of Risk Retention? - Precise Answer ✔✔Lower premiums
Align incentives
Create a safer work environment
What are the advantages of participating in a Risk Pool? - Precise Answer ✔✔Vehicle for government to
pool funds.
Affordable cost through economies of scale
Provide services to reduce risk
, Risk Pool - Premium = - Precise Answer ✔✔Revenue
Define IBNR - Precise Answer ✔✔Incurred but not reported claims
When is IBNR recorded? - Precise Answer ✔✔Record when event triggers coverage under policy
What amount is IBNR recorded? - Precise Answer ✔✔Amount based on estimate to settle claim.
How is IBNR recorded? - Precise Answer ✔✔As an accrual based on probable loss that can be reasonably
estimated, recoreded as an expense/liability.
How do we minimize risk? - Precise Answer ✔✔Provide safety in the workplace
Inspect buildings
Install extinquishers, sprinklers, smoke detectors
Training
What three areas should we monitor for risks? - Precise Answer ✔✔One-time projects
Geography (example: stormwater)
Unique Services
What should a Risk Management Committee accomplish? - Precise Answer ✔✔Create a Risk
Management policy
Develop inspection programs
Design safety
Create claims investigation system
Identify safety measures
Develop disciplinary procedures
Establish review boards
