lOMoAR cPSD| 22896205
CPCU 500 (BECOMING A LEADER IN RISK
MANAGEMENT AND INSURANCE) FINAL EXAM
1 QUESTIONS AND CORRECT VERIFIED
ANSWERS 2024 2025
A manufacturer relies on supplies of a key raw material which it obtains from a
particular supplier. The manufacturer makes arrangements with a second supplier
to provide the raw material if the primary supplier is unable to do so. The
manufacturer is practicing which one of the following risk control techniques?
Choose one answer.
A. Diversification
B. Recovery planning
C. Separation
D. Duplication - Correct Answer ✅ - D. Duplication
A manufacturer that elects to discontinue a particular product due to potential
liability loss exposures is practicing which one of the following risk control
techniques?
Choose one answer.
A. Avoidance
pg. 1
, lOMoAR cPSD| 22896205
B. Loss prevention
C. Loss reduction
D. Separation - Correct Answer ✅ - A. Avoidance
A risk management program must be monitored and periodically revised, and that
revision involves four steps. Which one of the following is one of those four steps?
Choose one answer.
A. Establish results-based rather than activity-based standards of acceptable
performance.
B. Compare actual results with the established performance standards.
C. Reduce any performance standards that have not been achieved by the actual
results.
D. Return to the first step in the risk management process to identify new loss
exposures. - Correct Answer ✅ - B. Compare actual results with the
established performance standards.
Achieving any post-loss goal involves expending risk management resources,
which may conflict with the pre-loss goal of Choose one answer.
A. Economy of operations.
B. Earnings stability.
pg. 2
, lOMoAR cPSD| 22896205
C. Social responsibility.
D. Tolerable uncertainty. - Correct Answer ✅ - A. Economy of operations.
An advantage that retention offers an individual or organization is
Choose one answer.
A. Incentive for risk control.
B. Reduction in exposure to large loss.
C. Reduction in cash flow variability.
D. Transference of responsibility for claims administration. - Correct Answer ✅
- A. Incentive for risk control.
An example of an intangible asset that an individual may possess is
Choose one answer.
A. An investment portfolio.
B. A unique skill set.
C. Money that is owed to them.
D. A rental property. - Correct Answer ✅ - B. A unique skill set.
pg. 3
, lOMoAR cPSD| 22896205
An organization that has adopted an ERM approach monitors risks, threats, and
opportunities that arise from a variety of sources. The two important benefits
provided by this approach verses traditional risk management are improved risk
communication and
Choose one answer.
A. Centralization of risk ownership.
B. Increased focus on transfer of risk.
C. Enhanced decision making.
D. Increased focus on avoidance of risk. - Correct Answer ✅ - C. Enhanced
decision making.
Another term for cause of loss is
Choose one answer.
A. Negative outcome.
B. Exposure.
C. Peril.
D. Hazard. - Correct Answer ✅ - C. Peril
As a single mother on a very tight budget, Ciara is tempted to skimp on her
insurance. However, her friend Mehmet tells her not to skimp on insurance,
pg. 4
CPCU 500 (BECOMING A LEADER IN RISK
MANAGEMENT AND INSURANCE) FINAL EXAM
1 QUESTIONS AND CORRECT VERIFIED
ANSWERS 2024 2025
A manufacturer relies on supplies of a key raw material which it obtains from a
particular supplier. The manufacturer makes arrangements with a second supplier
to provide the raw material if the primary supplier is unable to do so. The
manufacturer is practicing which one of the following risk control techniques?
Choose one answer.
A. Diversification
B. Recovery planning
C. Separation
D. Duplication - Correct Answer ✅ - D. Duplication
A manufacturer that elects to discontinue a particular product due to potential
liability loss exposures is practicing which one of the following risk control
techniques?
Choose one answer.
A. Avoidance
pg. 1
, lOMoAR cPSD| 22896205
B. Loss prevention
C. Loss reduction
D. Separation - Correct Answer ✅ - A. Avoidance
A risk management program must be monitored and periodically revised, and that
revision involves four steps. Which one of the following is one of those four steps?
Choose one answer.
A. Establish results-based rather than activity-based standards of acceptable
performance.
B. Compare actual results with the established performance standards.
C. Reduce any performance standards that have not been achieved by the actual
results.
D. Return to the first step in the risk management process to identify new loss
exposures. - Correct Answer ✅ - B. Compare actual results with the
established performance standards.
Achieving any post-loss goal involves expending risk management resources,
which may conflict with the pre-loss goal of Choose one answer.
A. Economy of operations.
B. Earnings stability.
pg. 2
, lOMoAR cPSD| 22896205
C. Social responsibility.
D. Tolerable uncertainty. - Correct Answer ✅ - A. Economy of operations.
An advantage that retention offers an individual or organization is
Choose one answer.
A. Incentive for risk control.
B. Reduction in exposure to large loss.
C. Reduction in cash flow variability.
D. Transference of responsibility for claims administration. - Correct Answer ✅
- A. Incentive for risk control.
An example of an intangible asset that an individual may possess is
Choose one answer.
A. An investment portfolio.
B. A unique skill set.
C. Money that is owed to them.
D. A rental property. - Correct Answer ✅ - B. A unique skill set.
pg. 3
, lOMoAR cPSD| 22896205
An organization that has adopted an ERM approach monitors risks, threats, and
opportunities that arise from a variety of sources. The two important benefits
provided by this approach verses traditional risk management are improved risk
communication and
Choose one answer.
A. Centralization of risk ownership.
B. Increased focus on transfer of risk.
C. Enhanced decision making.
D. Increased focus on avoidance of risk. - Correct Answer ✅ - C. Enhanced
decision making.
Another term for cause of loss is
Choose one answer.
A. Negative outcome.
B. Exposure.
C. Peril.
D. Hazard. - Correct Answer ✅ - C. Peril
As a single mother on a very tight budget, Ciara is tempted to skimp on her
insurance. However, her friend Mehmet tells her not to skimp on insurance,
pg. 4
