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CGFO - FINANCIAL ADMINISTRATION
QUESTIONS WITH 100% CORRECT
SOLUTIONS | GUARANTEED SUCCESS.
According to GASB 10, list the types of risk - correct 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? - correct 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? - correct answer-
Create a safe workplace
Prevent financial losses
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Provide stability (budget)
What are the three approaches to managing operational and
financial risk> - correct answer- Investment portfolio policies
(long-term and short-term)
Diversification strategies (spread risk)
Custody of assets (procedures)
What are 7 sources of risk? - correct answer- Physical
Legal
Operational
Political
Social
Economic
Cognitive (I.T. hack)
What are three tools to minimize risk? - correct 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
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What are the four parts of a Risk Management Program? -
correct answer- Risk Identification
Risk evaluation
Risk treatment
Implementation
In the case of Risk Retention, if claims are greater than
premiums = (Gain or Loss) - correct answer- Loss
In the case of Risk Retention, if claims are less than premiums
= (Gain or Loss) - correct answer- Gain
What is the advantages of Risk Retention? - correct answer-
Lower premiums
Align incentives
Create a safer work environment
What are the advantages of participating in a Risk Pool? -
correct answer- Vehicle for government to pool funds.
Affordable cost through economies of scale
Provide services to reduce risk
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Risk Pool - Premium = - correct answer- Revenue
Define IBNR - correct answer- Incurred but not reported claims
When is IBNR recorded? - correct answer- Record when event
triggers coverage under policy
What amount is IBNR recorded? - correct answer- Amount
based on estimate to settle claim.
How is IBNR recorded? - correct answer- As an accrual based
on probable loss that can be reasonably estimated, recoreded
as an expense/liability.
How do we minimize risk? - correct answer- Provide safety in
the workplace
Inspect buildings
Install extinquishers, sprinklers, smoke detectors
Training
CGFO - FINANCIAL ADMINISTRATION
QUESTIONS WITH 100% CORRECT
SOLUTIONS | GUARANTEED SUCCESS.
According to GASB 10, list the types of risk - correct 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? - correct 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? - correct answer-
Create a safe workplace
Prevent financial losses
,2 | Page
Provide stability (budget)
What are the three approaches to managing operational and
financial risk> - correct answer- Investment portfolio policies
(long-term and short-term)
Diversification strategies (spread risk)
Custody of assets (procedures)
What are 7 sources of risk? - correct answer- Physical
Legal
Operational
Political
Social
Economic
Cognitive (I.T. hack)
What are three tools to minimize risk? - correct 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
,3 | Page
What are the four parts of a Risk Management Program? -
correct answer- Risk Identification
Risk evaluation
Risk treatment
Implementation
In the case of Risk Retention, if claims are greater than
premiums = (Gain or Loss) - correct answer- Loss
In the case of Risk Retention, if claims are less than premiums
= (Gain or Loss) - correct answer- Gain
What is the advantages of Risk Retention? - correct answer-
Lower premiums
Align incentives
Create a safer work environment
What are the advantages of participating in a Risk Pool? -
correct answer- Vehicle for government to pool funds.
Affordable cost through economies of scale
Provide services to reduce risk
, 4 | Page
Risk Pool - Premium = - correct answer- Revenue
Define IBNR - correct answer- Incurred but not reported claims
When is IBNR recorded? - correct answer- Record when event
triggers coverage under policy
What amount is IBNR recorded? - correct answer- Amount
based on estimate to settle claim.
How is IBNR recorded? - correct answer- As an accrual based
on probable loss that can be reasonably estimated, recoreded
as an expense/liability.
How do we minimize risk? - correct answer- Provide safety in
the workplace
Inspect buildings
Install extinquishers, sprinklers, smoke detectors
Training
