INSR 310 FINAL EXAM QUESTIONS AND ANSWERS | INSR 310 FINAL
EXAM STUDY GUIDE & PRACTICE TEST 2026/2027
Attitudinal hazard - ANS ✔✔carelessness/indifference to a loss; increases frequency/severity of loss
Avoidance - ANS ✔✔risk control technique, certain loss exposure never acquired abandoned
Chance of loss - ANS ✔✔probability that a loss will occur.
Diversification - ANS ✔✔a risk-control technique that reduces the chance of loss by spreading the loss
exposure across different parties, securities, or transactions
Diversifiable risk - ANS ✔✔affects only individuals/small groups and not the entire economy, can be
reduced or eliminated by diversification
Enterprise risk - ANS ✔✔encompasses all major risks faced by a business firm; include pure, speculative,
strategic, operational, and financial risk.
Enterprise risk management - ANS ✔✔combines into a single unified treatment program all major risks
faced by the firm
Financial risk - ANS ✔✔uncertainty of loss b/c of adverse changes in the commodity prices, interest
rates, foreign exchange rates, and the value of money
Hazard - ANS ✔✔condition that creates or increases the chance of loss; Frequency or Severity of loss
Physical, Moral, Attitudinal; morale, Legal - ANS ✔✔4 types of hazards
Hedging - ANS ✔✔technique used for transferring the risk of unfavorable price fluctuations to a
speculator by purchasing and selling options and futures contracts on an organized exchange
Human life value - ANS ✔✔LIFE INSR purposes, present value of family's share of deceased
breadwinner's future earnings.
Law of large numbers - ANS ✔✔the greater the # of exposures, the more closely will actual results
approach the probable results expected from an infinite # of exposures
Legal hazard - ANS ✔✔characteristics of the legal system or regulatory environment that increase the
frequency or severity of losses
Liability risks - ANS ✔✔type of PURE RISK that most persons face; Can be held legally liable if you do
something that results in BI or PD to someone else; Court order you to pay damages to person you
injured
Loss exposure - ANS ✔✔any situation or circumstance in which a loss is possible, regardless of whether a
loss occurs
EXAM STUDY GUIDE & PRACTICE TEST 2026/2027
Attitudinal hazard - ANS ✔✔carelessness/indifference to a loss; increases frequency/severity of loss
Avoidance - ANS ✔✔risk control technique, certain loss exposure never acquired abandoned
Chance of loss - ANS ✔✔probability that a loss will occur.
Diversification - ANS ✔✔a risk-control technique that reduces the chance of loss by spreading the loss
exposure across different parties, securities, or transactions
Diversifiable risk - ANS ✔✔affects only individuals/small groups and not the entire economy, can be
reduced or eliminated by diversification
Enterprise risk - ANS ✔✔encompasses all major risks faced by a business firm; include pure, speculative,
strategic, operational, and financial risk.
Enterprise risk management - ANS ✔✔combines into a single unified treatment program all major risks
faced by the firm
Financial risk - ANS ✔✔uncertainty of loss b/c of adverse changes in the commodity prices, interest
rates, foreign exchange rates, and the value of money
Hazard - ANS ✔✔condition that creates or increases the chance of loss; Frequency or Severity of loss
Physical, Moral, Attitudinal; morale, Legal - ANS ✔✔4 types of hazards
Hedging - ANS ✔✔technique used for transferring the risk of unfavorable price fluctuations to a
speculator by purchasing and selling options and futures contracts on an organized exchange
Human life value - ANS ✔✔LIFE INSR purposes, present value of family's share of deceased
breadwinner's future earnings.
Law of large numbers - ANS ✔✔the greater the # of exposures, the more closely will actual results
approach the probable results expected from an infinite # of exposures
Legal hazard - ANS ✔✔characteristics of the legal system or regulatory environment that increase the
frequency or severity of losses
Liability risks - ANS ✔✔type of PURE RISK that most persons face; Can be held legally liable if you do
something that results in BI or PD to someone else; Court order you to pay damages to person you
injured
Loss exposure - ANS ✔✔any situation or circumstance in which a loss is possible, regardless of whether a
loss occurs
