RMI 201 Exam UPDATED Exam
Questions and CORRECT Answers
insurable risk - CORRECT ANSWER - 1) risk that is faced by a large number of people
and for which the amount of the loss can be predicted; 2) risk which is accidental or
unintentional; 3) Loss must be measurable; 4) cannot be catastrophic; 5) loss is calculable; 6)
accessible premium rates
worker's compensation - CORRECT ANSWER - health insurance plan providing
treatment for workers injured on the job
Speculative Risk - CORRECT ANSWER - Risk could have loss or gain.
Pure risk - CORRECT ANSWER - a risk that presents the chance of loss but no
opportunity for gain
strategic risk - CORRECT ANSWER - risks regarding the firm's financial goals and
objectives
enterprise risk - CORRECT ANSWER - encompasses all major risks faced by a business
firm, which include: pure risk, speculative risk, strategic risk, operational risk, and financial risk
Reinsurance - CORRECT ANSWER - An insurance company does not want to assume all
the risk for their company. They often purchase insurance from other insurance companies. The
shifting of an insured risk from one insurance company to another is called...
Underwriting - CORRECT ANSWER - the process of selecting, classifying, and pricing
applicants for insurance
coinsurance - CORRECT ANSWER - a provision under which both the insured and the
insurer share the covered losses
,MGRADES
liability insurance - CORRECT ANSWER - bodily and property payment to others if a
member of the insured household accidentally causes harm to other people or property
chance of loss - CORRECT ANSWER - probability of risk
TRIA - CORRECT ANSWER - Terrorism Risk Insurance Act
Insurance applied outside the U.S - CORRECT ANSWER - not liable - no coverage;
example war i Ukraine
non-insurance - CORRECT ANSWER - alternative insurance options outside insurance
company: 1) self insurance; 2) Risk retention; 3) captive insurance; 4) warranties
captive insurance - CORRECT ANSWER - an insurer owned by a parent firm for the
purpose of insuring the parent firm's loss exposures
Adverse selection - CORRECT ANSWER - people who are higher risk of loss seek
insurance at standard rates.
Non-diversified risk - CORRECT ANSWER - a risk which is not spread out
Diversified - CORRECT ANSWER - risk effecting a large amount of people, spread out
over a large population
objective risk - CORRECT ANSWER - not opinionated: data and evidence
characteristics of insurance - CORRECT ANSWER - - Pooling of losses
- Risk transfer
, MGRADES
- Indemnification
- Payment of fortuitous losses
risk manager - CORRECT ANSWER - identifying risks for the company and to determine
how likely a risk is, as well as its severity of impact on the company.
underwriter - CORRECT ANSWER - analyzes risk, decide if should insure good or bad
risk
pooling assests - CORRECT ANSWER - sharing losses inside a group
Sally started a business. Starting a new business is risky. Sally wants to make a profit. What type
of risk is sally's business? - CORRECT ANSWER - Speculative - don't know if the
business will succeed or fail.
why TRIA - CORRECT ANSWER - TRIA protects people and business alike by
accepting liability of specific losses in the event of a terrorist attack. This included property loss,
physical loss, and financial loss like workers compensation.
liability risk - CORRECT ANSWER - relates to harm or injury to other people or their
property because of your actions
hazard - CORRECT ANSWER - creates potential for loss
steps in risk management - CORRECT ANSWER - 1. Identify possible risks
2. Analyze risks
3. Act to reduce risks
4. Evaluate steps taken