RMIN QUESTIONS AND ANSWERS ALREADY PASSED

RMIN QUESTIONS AND ANSWERS ALREADY PASSED Despite being frequently reminded otherwise, Laura was in the habit of leaving her car door unlocked, often with her purse inside. As a result, Laura's car was stolen, along with her purse. Laura's behavior is an example of a Morale hazard. Which of the following statement about risk-taking behavior is correct? Risk averse would be happy to pay more than fair bet for insurance. Assume the probability of losing a laptop is 1% and a new laptop costs $1000. What is the fair bet cost for a laptop replacement insurance? $10 An example of an intangible asset that an individual may possess is A unique skill set. Which one of the following statements is true regarding the financial consequences of loss? The financial consequences depend on the type of loss exposure, the cause of loss, and the loss frequency and severity. George has received an inheritance and is deciding what to do with the money. He has limited his options to four choices: donate all the money to his favorite charity, use the entire inheritance to buy a yacht, invest the inheritance in a small rental property, or use the entire amount to purchase T-bills. Which one of the following statements is true regarding the risk involved in George's options? The rental property presents both pure and speculative risk; property values may increase, and the building could burn down. Some characteristics of the judicial system and regulatory environment increase the frequency and severity of loss. This hazard is called legal hazard. Which of the following statements about the use of deductibles is (are) true? I. They represent risk retention by insurance purchasers. II. They tend to increase the cost of adjusting small claims. I only Does loss control include which of the following? I. Loss reduction II. Loss prevention both I and II For risk-neutral people, what is one of the two utility assumptions? Constant marginal utility Brenda is the new risk manager at Telecom Company. She did a preliminary analysis to identify organizational risks. Brenda then scheduled a meeting of the organization's leaders, key employees, and other stakeholders. Brenda asked her assistant, Brian, to moderate the session since he is skilled in risk identification, and he is a skilled communicator as well. Brian encouraged brainstorming, and asked follow-up questions. After the session, Brenda and her risk management colleagues had a much deeper understanding of Telecom's risks. The technique that Brenda applied is called a Facilitated workshop Which one of the following is a technique used to provide a visual perspective of an organization's risks and to prioritize those risks? . Risk mapping A mortgage lender may compare the number of delinquent mortgage loans to the total number of loans outstanding. If the percentage exceeds a specified percentage, for example 10 or 20%, that may indicate that lending practices are too risky. This technique for identifying loss exposures is using An escalation or threshold trigger. NorTex Movie Company produces movies at a studio in North Texas. The risk manager decided to identify the range of potential consequences associated with various risks that the company faces. For example, if a severe hailstorm occurred while the company was filming a movie, there could be deaths and injuries, destruction of movie sets, delays in production, costs associated with filming at an alternative location, and loss of reputation and goodwill. The type of analysis performed by the risk manager is called Scenario analysis. Abandoning an existing loss exposure is an example of avoidance. In reviewing his company's operations, a risk manager noticed that all of the company's finished goods were stored in a single warehouse. The risk manager recommended that the finished goods be divided among three warehouses to prevent all of the finished goods from being destroyed by the same peril. Dividing the finished goods among three warehouses illustrates separation. The U.S. government is concerned that terrorists might try to crash a vehicle loaded with explosives into a U.S. embassy in a foreign country. Inside the gate to the embassy, they installed steel and cement posts in the road. These posts can be raised up from the ground to form a barrier against suicide bombers. The posts can be lowered back into the ground to allow safe vehicles to pass. This physical barrier system illustrates which risk management technique? loss prevention A risk manager is concerned with which of the following? I. Identifying potential losses II. Selecting the appropriate techniques for treating loss exposures both I and II Morris Company self-insures its workers compensation loss exposure. The risk manager of Morris Company is concerned about the possible impact of a single catastrophic claim. She decided to set a retention limit of $500,000 per-claim, and to purchase insurance that will be begin to pay once Morris Company has paid $500,000 on a single claim. The insurance the risk manager purchased is called excess insurance Pre-loss objectives of risk management include which of the following? I. The organization should not incur substantial costs in exchange for slight benefits II. Continuity of operations I only Risk definition uncertainty concerning the occurrence of a loss, variation of outcomes Pure Risk only the possibilities of loss or no loss Premature death Fire, Lightening, flood