LM1 – CII COMPREHENSIVE STUDY
GUIDE 2026 FULL QUESTIONS AND
SOLUTIONS GRADED A+
◍ What is the correct term for the measurement of risks and dealing with them
collectively?.
Answer: Risk Management
◍ What are some of the ways of defining risk?.
Answer: Possibility of something unfortunate happeningDoubt concerning
how something will turn outUnpredictabilityPossibility of a lossChance that
there might be a gain
◍ Explain how insurance is a risk transfer mechanism.
Answer: The acceptance of an unknown future potential risk by an insurer
for a known premium
◍ What are the other ways the term 'risk' can be used in the insurance market?.
Answer: Peril being insuredSubject-matter of insuranceThe thing insured
◍ What type of person is more likely to buy insurance, risk-seeking or
risk-averse.
Answer: Risk-averse
◍ What is the term for when a business takes control of and develops a formal
strategy fir managing the various risks that affect their business?.
Answer: Risk management
◍ What does AIRMIC stand for and what do they do?.
Answer: the Association of Insurance Risk Managers (in Industry and
Commerce) promotes the interests of corporate insurance buyers and those
involved in Enterprise Risk Management, and to encourage best practice
, ◍ What are the 3 steps involved in managing risk?.
Answer: IdentificationAnalysisControl
◍ Which stage of risk management involves a company discovering its
possible existing and potential future threats?.
Answer: Risk identification
◍ Which stage of risk management involves the examination (largely carried
out by risk managers and insurers) of past data to evaluate or analyse a risk?.
Answer: Risk analysis
◍ When a risk is seen to have the potential for adverse consequences, what
term is used to describe the course of action that is taken to reduce or ideally
eliminate the risk?.
Answer: Risk control- the final stage of risk management
◍ What are the measurements that a business can use to rank in order the risks
it faces?.
Answer: The likelihood of the risk actually happening The likely impact
◍ What is the elimination or reduction of a risk subject to?.
Answer: Cost-based analysisLikelihood x Impact compared compared to
cost of mitigation/elimination
◍ In risk management, what type of control would the installation of sprinklers
and fire alarms be?.
Answer: Physical control
◍ What is an example of a financial control in risk management?.
Answer: Arranging for a security firm to accept responsibility for money
whilst in its control within the wording of a contract
◍ Why do insurers work with organisations such as the Building Research
Establishment (BRE) and the Fire Protection Association (FPA)?.
Answer: For researching areas of loss prevention and control. These bodies
provide construction guidelines, reports on new industrial processes and
research new construction methods.
GUIDE 2026 FULL QUESTIONS AND
SOLUTIONS GRADED A+
◍ What is the correct term for the measurement of risks and dealing with them
collectively?.
Answer: Risk Management
◍ What are some of the ways of defining risk?.
Answer: Possibility of something unfortunate happeningDoubt concerning
how something will turn outUnpredictabilityPossibility of a lossChance that
there might be a gain
◍ Explain how insurance is a risk transfer mechanism.
Answer: The acceptance of an unknown future potential risk by an insurer
for a known premium
◍ What are the other ways the term 'risk' can be used in the insurance market?.
Answer: Peril being insuredSubject-matter of insuranceThe thing insured
◍ What type of person is more likely to buy insurance, risk-seeking or
risk-averse.
Answer: Risk-averse
◍ What is the term for when a business takes control of and develops a formal
strategy fir managing the various risks that affect their business?.
Answer: Risk management
◍ What does AIRMIC stand for and what do they do?.
Answer: the Association of Insurance Risk Managers (in Industry and
Commerce) promotes the interests of corporate insurance buyers and those
involved in Enterprise Risk Management, and to encourage best practice
, ◍ What are the 3 steps involved in managing risk?.
Answer: IdentificationAnalysisControl
◍ Which stage of risk management involves a company discovering its
possible existing and potential future threats?.
Answer: Risk identification
◍ Which stage of risk management involves the examination (largely carried
out by risk managers and insurers) of past data to evaluate or analyse a risk?.
Answer: Risk analysis
◍ When a risk is seen to have the potential for adverse consequences, what
term is used to describe the course of action that is taken to reduce or ideally
eliminate the risk?.
Answer: Risk control- the final stage of risk management
◍ What are the measurements that a business can use to rank in order the risks
it faces?.
Answer: The likelihood of the risk actually happening The likely impact
◍ What is the elimination or reduction of a risk subject to?.
Answer: Cost-based analysisLikelihood x Impact compared compared to
cost of mitigation/elimination
◍ In risk management, what type of control would the installation of sprinklers
and fire alarms be?.
Answer: Physical control
◍ What is an example of a financial control in risk management?.
Answer: Arranging for a security firm to accept responsibility for money
whilst in its control within the wording of a contract
◍ Why do insurers work with organisations such as the Building Research
Establishment (BRE) and the Fire Protection Association (FPA)?.
Answer: For researching areas of loss prevention and control. These bodies
provide construction guidelines, reports on new industrial processes and
research new construction methods.
