CPRM Certified Personal Risk Manager Exam
Question 1: In risk management fundamentals, which principle emphasizes that risk
cannot be eliminated, only managed?
A. Risk Avoidance
B. Risk Acceptance
C. Risk Transfer
D. Risk Mitigation
Answer: B
Explanation: The principle of risk acceptance recognizes that not all risks can be eliminated;
many must simply be managed or accepted as inherent to the activity.
Question 2: Which of the following best describes qualitative risk assessment?
A. Uses numerical probabilities
B. Relies on descriptive measures and expert judgment
C. Involves strict statistical modeling
D. Utilizes computer simulations exclusively
Answer: B
Explanation: Qualitative risk assessment relies on expert judgment and descriptive measures
rather than solely on numerical data.
Question 3: What is the first step in a risk management framework?
A. Risk control
B. Risk identification
C. Risk financing
D. Risk transfer
Answer: B
Explanation: Identifying risks is the crucial first step before any analysis, control, or financing
decisions can be made.
Question 4: Which framework is commonly referenced in risk management standards?
A. COSO Framework
B. Six Sigma
C. SWOT Analysis
D. PESTLE Analysis
Answer: A
Explanation: The COSO Framework is widely recognized for its comprehensive approach to risk
management and internal controls.
Question 5: When conducting a risk analysis, what is the primary purpose of risk
identification?
A. To assign financial values
B. To list all potential hazards
C. To eliminate risks
,D. To select insurance products
Answer: B
Explanation: Risk identification involves listing all potential hazards or exposures that might
impact an individual or organization.
Question 6: Which risk assessment technique relies on expert opinions and group
discussions?
A. Monte Carlo Simulation
B. Delphi Technique
C. Sensitivity Analysis
D. Historical Data Analysis
Answer: B
Explanation: The Delphi Technique uses rounds of expert opinions to reach a consensus on risk
factors and their impacts.
Question 7: In the context of risk management fundamentals, what does “risk appetite”
refer to?
A. The willingness to take on risk
B. The total risk exposure
C. The amount of risk insurance purchased
D. The risk monitoring process
Answer: A
Explanation: Risk appetite defines the level of risk an individual or organization is willing to
accept in pursuit of objectives.
Question 8: Which of the following is a key benefit of using a standardized risk
management framework?
A. Increased regulatory scrutiny
B. Consistent and repeatable processes
C. Reduced need for expert judgment
D. Higher operational costs
Answer: B
Explanation: Standardized frameworks provide consistency and repeatability, which enhance the
overall effectiveness of risk management.
Question 9: What is a primary goal of quantitative risk assessment?
A. To provide narrative risk descriptions
B. To measure risks using numerical values
C. To rely solely on qualitative data
D. To document risk in words
Answer: B
Explanation: Quantitative risk assessments assign numerical values to risk factors, aiding in the
objective evaluation of risk severity.
Question 10: Which technique is often used in quantitative risk analysis to model
uncertainty?
,A. Brainstorming
B. Monte Carlo Simulation
C. Risk Heat Mapping
D. SWOT Analysis
Answer: B
Explanation: Monte Carlo Simulation uses random sampling to model the probability of different
outcomes in uncertain conditions.
Question 11: Personal risk management includes analyzing which types of risks?
A. Only financial and property risks
B. Only liability risks
C. Health, property, liability, and financial risks
D. Only health risks
Answer: C
Explanation: Personal risk management covers a broad spectrum including health, property,
liability, and financial risks.
Question 12: Which factor is most important when analyzing a client’s personal risk
profile?
A. Their age only
B. Their entire lifestyle and exposures
C. Their location exclusively
D. Their occupation only
Answer: B
Explanation: A comprehensive view of a client’s lifestyle, exposures, and personal
circumstances is essential for accurate risk profiling.
Question 13: What is a critical component of data collection in personal risk analysis?
A. Ignoring historical trends
B. Gathering both quantitative and qualitative data
C. Relying on anecdotal evidence alone
D. Only using online surveys
Answer: B
Explanation: Collecting both quantitative and qualitative data ensures a well-rounded
understanding of personal risk.
Question 14: Which of the following is NOT typically considered a personal risk?
A. Health
B. Property
C. Cybersecurity
D. Liability
Answer: C
Explanation: Although cybersecurity is important, personal risk analysis traditionally focuses on
health, property, liability, and financial risks.
, Question 15: Which personal risk analysis technique involves categorizing risks by
likelihood and impact?
A. Risk Transference
B. Risk Prioritization Matrix
C. Scenario Planning
D. SWOT Analysis
Answer: B
Explanation: A risk prioritization matrix categorizes risks based on their likelihood and impact to
determine focus areas.
Question 16: In the context of insurance, what is meant by “risk transfer”?
A. Avoiding risk
B. Sharing risk among multiple parties
C. Transferring financial consequences to an insurer
D. Eliminating risk completely
Answer: C
Explanation: Risk transfer involves shifting the financial impact of a risk to an insurance
company.
Question 17: What is one advantage of personal lines of insurance?
A. They are not regulated
B. They provide tailored coverage for individual needs
C. They guarantee zero out-of-pocket expense
D. They always cover every type of loss
Answer: B
Explanation: Personal lines of insurance are designed to offer coverage tailored to individual
circumstances and needs.
Question 18: Which type of insurance is best known for providing liability coverage above
underlying policies?
A. Auto Insurance
B. Homeowners Insurance
C. Umbrella Insurance
D. Life Insurance
Answer: C
Explanation: Umbrella insurance offers additional liability coverage that goes beyond the limits
of other personal insurance policies.
Question 19: When selecting an insurance policy, what is the importance of policy analysis?
A. To identify hidden risks
B. To ensure the policy covers all potential risks
C. To determine the premium cost only
D. To assess the effectiveness of risk transfer
Answer: D
Explanation: Policy analysis assesses the effectiveness of risk transfer by examining coverage
limits, exclusions, and conditions.
Question 1: In risk management fundamentals, which principle emphasizes that risk
cannot be eliminated, only managed?
A. Risk Avoidance
B. Risk Acceptance
C. Risk Transfer
D. Risk Mitigation
Answer: B
Explanation: The principle of risk acceptance recognizes that not all risks can be eliminated;
many must simply be managed or accepted as inherent to the activity.
Question 2: Which of the following best describes qualitative risk assessment?
A. Uses numerical probabilities
B. Relies on descriptive measures and expert judgment
C. Involves strict statistical modeling
D. Utilizes computer simulations exclusively
Answer: B
Explanation: Qualitative risk assessment relies on expert judgment and descriptive measures
rather than solely on numerical data.
Question 3: What is the first step in a risk management framework?
A. Risk control
B. Risk identification
C. Risk financing
D. Risk transfer
Answer: B
Explanation: Identifying risks is the crucial first step before any analysis, control, or financing
decisions can be made.
Question 4: Which framework is commonly referenced in risk management standards?
A. COSO Framework
B. Six Sigma
C. SWOT Analysis
D. PESTLE Analysis
Answer: A
Explanation: The COSO Framework is widely recognized for its comprehensive approach to risk
management and internal controls.
Question 5: When conducting a risk analysis, what is the primary purpose of risk
identification?
A. To assign financial values
B. To list all potential hazards
C. To eliminate risks
,D. To select insurance products
Answer: B
Explanation: Risk identification involves listing all potential hazards or exposures that might
impact an individual or organization.
Question 6: Which risk assessment technique relies on expert opinions and group
discussions?
A. Monte Carlo Simulation
B. Delphi Technique
C. Sensitivity Analysis
D. Historical Data Analysis
Answer: B
Explanation: The Delphi Technique uses rounds of expert opinions to reach a consensus on risk
factors and their impacts.
Question 7: In the context of risk management fundamentals, what does “risk appetite”
refer to?
A. The willingness to take on risk
B. The total risk exposure
C. The amount of risk insurance purchased
D. The risk monitoring process
Answer: A
Explanation: Risk appetite defines the level of risk an individual or organization is willing to
accept in pursuit of objectives.
Question 8: Which of the following is a key benefit of using a standardized risk
management framework?
A. Increased regulatory scrutiny
B. Consistent and repeatable processes
C. Reduced need for expert judgment
D. Higher operational costs
Answer: B
Explanation: Standardized frameworks provide consistency and repeatability, which enhance the
overall effectiveness of risk management.
Question 9: What is a primary goal of quantitative risk assessment?
A. To provide narrative risk descriptions
B. To measure risks using numerical values
C. To rely solely on qualitative data
D. To document risk in words
Answer: B
Explanation: Quantitative risk assessments assign numerical values to risk factors, aiding in the
objective evaluation of risk severity.
Question 10: Which technique is often used in quantitative risk analysis to model
uncertainty?
,A. Brainstorming
B. Monte Carlo Simulation
C. Risk Heat Mapping
D. SWOT Analysis
Answer: B
Explanation: Monte Carlo Simulation uses random sampling to model the probability of different
outcomes in uncertain conditions.
Question 11: Personal risk management includes analyzing which types of risks?
A. Only financial and property risks
B. Only liability risks
C. Health, property, liability, and financial risks
D. Only health risks
Answer: C
Explanation: Personal risk management covers a broad spectrum including health, property,
liability, and financial risks.
Question 12: Which factor is most important when analyzing a client’s personal risk
profile?
A. Their age only
B. Their entire lifestyle and exposures
C. Their location exclusively
D. Their occupation only
Answer: B
Explanation: A comprehensive view of a client’s lifestyle, exposures, and personal
circumstances is essential for accurate risk profiling.
Question 13: What is a critical component of data collection in personal risk analysis?
A. Ignoring historical trends
B. Gathering both quantitative and qualitative data
C. Relying on anecdotal evidence alone
D. Only using online surveys
Answer: B
Explanation: Collecting both quantitative and qualitative data ensures a well-rounded
understanding of personal risk.
Question 14: Which of the following is NOT typically considered a personal risk?
A. Health
B. Property
C. Cybersecurity
D. Liability
Answer: C
Explanation: Although cybersecurity is important, personal risk analysis traditionally focuses on
health, property, liability, and financial risks.
, Question 15: Which personal risk analysis technique involves categorizing risks by
likelihood and impact?
A. Risk Transference
B. Risk Prioritization Matrix
C. Scenario Planning
D. SWOT Analysis
Answer: B
Explanation: A risk prioritization matrix categorizes risks based on their likelihood and impact to
determine focus areas.
Question 16: In the context of insurance, what is meant by “risk transfer”?
A. Avoiding risk
B. Sharing risk among multiple parties
C. Transferring financial consequences to an insurer
D. Eliminating risk completely
Answer: C
Explanation: Risk transfer involves shifting the financial impact of a risk to an insurance
company.
Question 17: What is one advantage of personal lines of insurance?
A. They are not regulated
B. They provide tailored coverage for individual needs
C. They guarantee zero out-of-pocket expense
D. They always cover every type of loss
Answer: B
Explanation: Personal lines of insurance are designed to offer coverage tailored to individual
circumstances and needs.
Question 18: Which type of insurance is best known for providing liability coverage above
underlying policies?
A. Auto Insurance
B. Homeowners Insurance
C. Umbrella Insurance
D. Life Insurance
Answer: C
Explanation: Umbrella insurance offers additional liability coverage that goes beyond the limits
of other personal insurance policies.
Question 19: When selecting an insurance policy, what is the importance of policy analysis?
A. To identify hidden risks
B. To ensure the policy covers all potential risks
C. To determine the premium cost only
D. To assess the effectiveness of risk transfer
Answer: D
Explanation: Policy analysis assesses the effectiveness of risk transfer by examining coverage
limits, exclusions, and conditions.
