UGA RMIN 4000 CORRECT FINAL EXAM QUESTIONS
AND ANSWERS SET A+
✔✔noninsurance transfers - ✔✔methods other than insurance by which a pure risk and
its potential financial consequences are transferred to another party (apartment lease or
contracts)
✔✔emphasized areas of commercial insurance - ✔✔selection of insurance coverages,
selection of insurer, negotiation of terms, dissemination of info of coverages, periodic
review of insurance program
✔✔deductible - ✔✔amount you must pay before you begin receiving any benefits from
your insurance company
✔✔excess insurance - ✔✔plan in which the insurer does not participate in the loss until
the actual loss exceeds the amount a firm has decided to retain
✔✔manuscript - ✔✔policy specially tailored for a firm
✔✔what are advantages of commercial insurance? - ✔✔firm indemnified for loss and
continue operation, uncertainty is reduced, firm may receive valuable RM services, and
premiums are tax deductible
✔✔what are disadvantages of commercial insurance? - ✔✔premiums may be more
costly, negotiations of policies takes time and effort, most policies are annual, and the
RM might be lax in exercising loss control
✔✔underwriting cycles - ✔✔Hard market - insurer profitability is declining, underwriting
standards are tightened, premiums increase, and insurance is hard to obtain.
Soft market - profitability is improving, standards are loosened, premiums decline, and
insurance become easier to obtain.
, ✔✔What are some benefits of risk management? - ✔✔enables a firm to attain its
pre/post loss objectives easier, society benefits because both direct and indirect losses
are reduced, and can reduce a firm's total cost of risk
✔✔Enterprise Risk Management (ERM) - ✔✔strategic business discipline that supports
the achievement of an organization's business objectives by addressing the full
spectrum of its risks and managing the combined impact of those risks as an integrated
risk portfolio (typically headed by CRO)
✔✔what was the biggest category of insurance loss in 9/11? - ✔✔Business interruption
(33% with $15.6 B)
✔✔What are the types of risks within ERM? - ✔✔Hazard, operational, financial, and
strategic
✔✔Hazard risks (ERM) - ✔✔traditional "pure" risks from regular RM
✔✔operational risk - ✔✔results from the firm's day to day business operations (ex:
supply chain, cybersecurity, customer service)
✔✔financial risk - ✔✔arise from changing conditions in financial markets (ex: interest
rates, exchange rates, credit risk, commodity and liquidity availability)
✔✔strategic risk - ✔✔external risks that a firm has no control over; must be in ready
position to respond (ex: brick and mortar stores able to convert to online)
✔✔Some other ERM risks include: - ✔✔reputational, regulatory/compliance (OSHA,
taxes), terrorism, COVID, and climate change
✔✔risk register - ✔✔table with risk, category, responsible party, maximum possible and
probable loss, comments, and risk score if treated or left untreated
✔✔risk map - ✔✔graph of risks with axes of frequency and severity
✔✔What are some advantages of an ERM program? - ✔✔increase awareness of risk,
integrated response to full range of risks, alignment with org.'s risk tolerance and its
strategies, fewer operational surprises and loses which increase value of org., and
greater compliance with regulations and improved accountability
✔✔Challenges/Barriers of an ERM Programs - ✔✔dynamic, lack of commitment from
senior leadership, resistance to change / disagreement over responsibilities / turf war,
and communication
AND ANSWERS SET A+
✔✔noninsurance transfers - ✔✔methods other than insurance by which a pure risk and
its potential financial consequences are transferred to another party (apartment lease or
contracts)
✔✔emphasized areas of commercial insurance - ✔✔selection of insurance coverages,
selection of insurer, negotiation of terms, dissemination of info of coverages, periodic
review of insurance program
✔✔deductible - ✔✔amount you must pay before you begin receiving any benefits from
your insurance company
✔✔excess insurance - ✔✔plan in which the insurer does not participate in the loss until
the actual loss exceeds the amount a firm has decided to retain
✔✔manuscript - ✔✔policy specially tailored for a firm
✔✔what are advantages of commercial insurance? - ✔✔firm indemnified for loss and
continue operation, uncertainty is reduced, firm may receive valuable RM services, and
premiums are tax deductible
✔✔what are disadvantages of commercial insurance? - ✔✔premiums may be more
costly, negotiations of policies takes time and effort, most policies are annual, and the
RM might be lax in exercising loss control
✔✔underwriting cycles - ✔✔Hard market - insurer profitability is declining, underwriting
standards are tightened, premiums increase, and insurance is hard to obtain.
Soft market - profitability is improving, standards are loosened, premiums decline, and
insurance become easier to obtain.
, ✔✔What are some benefits of risk management? - ✔✔enables a firm to attain its
pre/post loss objectives easier, society benefits because both direct and indirect losses
are reduced, and can reduce a firm's total cost of risk
✔✔Enterprise Risk Management (ERM) - ✔✔strategic business discipline that supports
the achievement of an organization's business objectives by addressing the full
spectrum of its risks and managing the combined impact of those risks as an integrated
risk portfolio (typically headed by CRO)
✔✔what was the biggest category of insurance loss in 9/11? - ✔✔Business interruption
(33% with $15.6 B)
✔✔What are the types of risks within ERM? - ✔✔Hazard, operational, financial, and
strategic
✔✔Hazard risks (ERM) - ✔✔traditional "pure" risks from regular RM
✔✔operational risk - ✔✔results from the firm's day to day business operations (ex:
supply chain, cybersecurity, customer service)
✔✔financial risk - ✔✔arise from changing conditions in financial markets (ex: interest
rates, exchange rates, credit risk, commodity and liquidity availability)
✔✔strategic risk - ✔✔external risks that a firm has no control over; must be in ready
position to respond (ex: brick and mortar stores able to convert to online)
✔✔Some other ERM risks include: - ✔✔reputational, regulatory/compliance (OSHA,
taxes), terrorism, COVID, and climate change
✔✔risk register - ✔✔table with risk, category, responsible party, maximum possible and
probable loss, comments, and risk score if treated or left untreated
✔✔risk map - ✔✔graph of risks with axes of frequency and severity
✔✔What are some advantages of an ERM program? - ✔✔increase awareness of risk,
integrated response to full range of risks, alignment with org.'s risk tolerance and its
strategies, fewer operational surprises and loses which increase value of org., and
greater compliance with regulations and improved accountability
✔✔Challenges/Barriers of an ERM Programs - ✔✔dynamic, lack of commitment from
senior leadership, resistance to change / disagreement over responsibilities / turf war,
and communication
