CPCU 500 EXAM 2 PAPER REVIEW QUESTIONS
AND ANSWERS SURE A+
✔✔Insurers and risk managers can use the large volumes of data collected and
organized through telematics to help improve results for which one of the following
types of insurance?
Select one:
A. Health
B. Workers compensation
C. Automobile
D. Property - ✔✔C. Automobile
✔✔Organizations find it difficult to establish a benchmark against which the
performance of their risk management program can be assessed because it is difficult
to assign a specific value to the
Select one:
,A. Cost of implementing and administering risk management.
B. Cost of measures to prevent or reduce the size of potential losses.
C. Cost of residual uncertainty.
D. Cost of losses not reimbursed by insurance. - ✔✔C. Cost of residual uncertainty.
✔✔The two benefits of risk management affecting individuals, organizations, and
society are: it preserves financial resources by reducing expected losses and it
Select one:
A. Reduces the residual uncertainty associated with risk.
B. Increases productivity within the economy and improves overall standard of living.
C. Increases the attractiveness to investors.
D. Improves the allocation of productive resources. - ✔✔A. Reduces the residual
uncertainty associated with risk.
✔✔Which one of the following statements is true regarding risk management efforts on
the part of individuals, organizations, and society in general?
Select one:
A. Organizations tend to exhibit a greater degree of risk aversion than do individuals.
B. The benefits that risk management efforts provide to individuals and organizations
are not felt by society in general.
C. Risk management makes those who own or run an organization more willing to
undertake risky activities.
D. Risk management tends to increase the deterrence effect of risk in organizations. -
✔✔C. Risk management makes those who own or run an organization more willing to
undertake risky activities.
✔✔Risk management programs should
Select one:
A. Operate economically and efficiently.
B. Incur substantial costs for slight benefits.
,C. Be an autonomous part of the organization.
D. Not use benchmarking to compare costs. - ✔✔A. Operate economically and
efficiently.
✔✔Which of the following risk management program goals is an essential goal for all
public entities?
Select one:
A. Growth
B. Continuity of operations
C. Earning stability
D. Survival - ✔✔B. Continuity of operations
✔✔Aligning risks with the organization's risk appetite defines
Select one:
A. Compliance.
B. Tolerable uncertainty.
C. Social responsibility.
D. Value at risk. - ✔✔B. Tolerable uncertainty.
✔✔The second step in the risk management process is analyzing loss exposures.
Which one of the following is true regarding this step?
Select one:
A. Loss exposures are analyzed based on loss frequency, loss severity, total dollar
losses, and timing in this step.
B. Loss exposures that could interfere with the achievement of the organization's goals
are identified in this step.
C. A weakness of loss exposure analysis is that it is useful only for those types of losses
that an organization has suffered in the past.
, D. A major strength of loss exposure analysis is that the process is generally
inexpensive. - ✔✔A. Loss exposures are analyzed based on loss frequency, loss
severity, total dollar losses, and timing in this step.
✔✔Which one of the following is the first step in the risk management process?
Select one:
A. Examine the feasibility of risk management techniques
B. Monitor results and revise the risk management program
C. Identify loss exposures
D. Analyze loss exposures - ✔✔C. Identify loss exposures
✔✔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?
Select one:
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. - ✔✔B. Compare actual results with the established performance standards.
✔✔After identifying and analyzing loss exposures and evaluating and selecting the
appropriate risk management techniques, the next step in the risk management process
is to
Select one:
A. Monitor the results.
B. Revise the risk management program.
C. Implement the selected techniques.
D. Decide on risk financing techniques. - ✔✔C. Implement the selected techniques.
AND ANSWERS SURE A+
✔✔Insurers and risk managers can use the large volumes of data collected and
organized through telematics to help improve results for which one of the following
types of insurance?
Select one:
A. Health
B. Workers compensation
C. Automobile
D. Property - ✔✔C. Automobile
✔✔Organizations find it difficult to establish a benchmark against which the
performance of their risk management program can be assessed because it is difficult
to assign a specific value to the
Select one:
,A. Cost of implementing and administering risk management.
B. Cost of measures to prevent or reduce the size of potential losses.
C. Cost of residual uncertainty.
D. Cost of losses not reimbursed by insurance. - ✔✔C. Cost of residual uncertainty.
✔✔The two benefits of risk management affecting individuals, organizations, and
society are: it preserves financial resources by reducing expected losses and it
Select one:
A. Reduces the residual uncertainty associated with risk.
B. Increases productivity within the economy and improves overall standard of living.
C. Increases the attractiveness to investors.
D. Improves the allocation of productive resources. - ✔✔A. Reduces the residual
uncertainty associated with risk.
✔✔Which one of the following statements is true regarding risk management efforts on
the part of individuals, organizations, and society in general?
Select one:
A. Organizations tend to exhibit a greater degree of risk aversion than do individuals.
B. The benefits that risk management efforts provide to individuals and organizations
are not felt by society in general.
C. Risk management makes those who own or run an organization more willing to
undertake risky activities.
D. Risk management tends to increase the deterrence effect of risk in organizations. -
✔✔C. Risk management makes those who own or run an organization more willing to
undertake risky activities.
✔✔Risk management programs should
Select one:
A. Operate economically and efficiently.
B. Incur substantial costs for slight benefits.
,C. Be an autonomous part of the organization.
D. Not use benchmarking to compare costs. - ✔✔A. Operate economically and
efficiently.
✔✔Which of the following risk management program goals is an essential goal for all
public entities?
Select one:
A. Growth
B. Continuity of operations
C. Earning stability
D. Survival - ✔✔B. Continuity of operations
✔✔Aligning risks with the organization's risk appetite defines
Select one:
A. Compliance.
B. Tolerable uncertainty.
C. Social responsibility.
D. Value at risk. - ✔✔B. Tolerable uncertainty.
✔✔The second step in the risk management process is analyzing loss exposures.
Which one of the following is true regarding this step?
Select one:
A. Loss exposures are analyzed based on loss frequency, loss severity, total dollar
losses, and timing in this step.
B. Loss exposures that could interfere with the achievement of the organization's goals
are identified in this step.
C. A weakness of loss exposure analysis is that it is useful only for those types of losses
that an organization has suffered in the past.
, D. A major strength of loss exposure analysis is that the process is generally
inexpensive. - ✔✔A. Loss exposures are analyzed based on loss frequency, loss
severity, total dollar losses, and timing in this step.
✔✔Which one of the following is the first step in the risk management process?
Select one:
A. Examine the feasibility of risk management techniques
B. Monitor results and revise the risk management program
C. Identify loss exposures
D. Analyze loss exposures - ✔✔C. Identify loss exposures
✔✔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?
Select one:
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. - ✔✔B. Compare actual results with the established performance standards.
✔✔After identifying and analyzing loss exposures and evaluating and selecting the
appropriate risk management techniques, the next step in the risk management process
is to
Select one:
A. Monitor the results.
B. Revise the risk management program.
C. Implement the selected techniques.
D. Decide on risk financing techniques. - ✔✔C. Implement the selected techniques.
