©THEBRIGHT 2025 ALL RIGHTS RESERVED 11:11PM.
CPCU 500 Exam Questions And Answers
2025 Update.
Southwest Interstate Railroad (SIR) is concerned about the number derailments in recent years.
It's not cost effective to use human assets to inspect tracks, bridges, and trestles. Instead, SIR
has started to use drones. A drone can fly low over tracks and above/below bridges and
trestles. The drones record video that is transmitted to corporate headquarters where it is
simultaneously scanned for derailment hazards. In the past six months, the drones detected a
track blockage caused by a rock slide and damage to tracks in a remote area cause by an
earthquake. SIR dispatched work crews to make the tracks once again passable, and no
derailments occurred. SIR's use of drones, video, real-term video scanning, and computer
analysis illustrates which one of the following? - Answer✔Preventative analytics
Autonomous Vehicle Applications (AVA) is a start-up company that develops safety
technologies that can be sold to companies that are producing autonomous vehicles. One
technology AVA is developing allows an autonomous vehicle to detect, extract, and analyze
images; and then to respond to the images. For example, the technology would detect a
presence in a crosswalk, extract the image, and a computer would analyze the image. When the
image was determined to be a human being, the vehicle would slow down or stop until the
crosswalk was clear. This technology, which is designed to capture and analyze images, and to
act on the recognition of the image; is called - Answer✔Computer vision
In addition to metal detectors, many airports have installed a second type of scanning
technology for checked baggage and cargo. The checked bags and cargo pass through a portal
with scanners programmed to detect and test for explosive trace fumes. These scanners, which
detect explosives based on air samples, are an example of what type of sensor used for risk
assessment and control? - Answer✔Biochemical sensors
Last year, three Metro City firemen died responding to a fire at a chemical plant, when they
were overcome by toxic fumes. In response, Metro City is purchasing advanced first responder
gear. It includes special flame retardant suits with chemical and explosive fume sensors, air
quality sensors, and heat sensors. Responders will also wear special watches that will track a
responder's pulse, respiration, and blood pressure; and helmets that include video cameras. All
of these sensors will feed data to a computer in real-time. The computer will analyze the data
and issue threat levels and evacuation orders, if necessary. The protective gear Metro City will
1
,©THEBRIGHT 2025 ALL RIGHTS RESERVED 11:11PM.
purchase and the data transmission and analysis capability illustrate the use of - Answer✔Smart
products
AMRM Insurance Company sells insurance in Virginia, North Carolina, South Carolina, and
Georgia. The company has compiled a policyowner data base that can be used to send text
messages when hurricanes approach. The company provides early warnings, storm updates
from the National Weather Service, and hurricane safety measures. The company credits the
system with reduced hurricane claims. The use of the texting system is an example of -
Answer✔Preventive analytics
Which one of the following statements is true with regard to preventive analytics? -
Answer✔Preventive analytics uses smart products and data analytics to identify root loss
causes and their implications.
Don is the Risk Manager for Rafferty Corporation. One of his peers, Sally, asks him one day,
"How do you define risk?" When Don replies, which one of the following statements is
accurate? - Answer✔Risk has different meanings within the risk management and insurance
communities.
The difference between risk tech and insurtech is - Answer✔Risk tech goes beyond insurtech by
expanding its focus to making risk financing more efficient and preventing and mitigating losses
in a variety of industries.
Catastrophes such as recent earthquakes and the 2011 tsunami in Japan pointed out a need for
many organizations to evaluate and manage their - Answer✔Supply-chain risk.
William is a risk manager for Green Mountain Trucking. He has always analyzed auto loss
frequency and severity rates for the fleet. William would like to collect data on vehicle speeds,
braking patterns, and distance traveled and compare that with the loss history. Which one of
the following would help William capture and analyze this data? - Answer✔Vehicle telematics
Which one of the following statements about the use of drones is true? - Answer✔Drones may
be equipped with cameras that relay data in real-time.
The traditional definition of risk management reflects the traditional concept of risk as -
Answer✔Negative
Take Your Order (TYO) is a company that specializes in taking product orders for vendors. The
manufacturer of a product can run a television or internet ad for a product with a toll-free
number. Customer calls for the products are routed to TYO, where one hundred operators are
available to receive the calls. Each operator is assigned a cubicle with a computer terminal,
video display monitor, and a telephone. TYO experienced high workers compensation claims
from its operators, claiming neck strain, eye strain, and wrist pain. In an effort to reduce such
injuries, TYO evaluated each operator's work area. The height of chairs and video monitors
were adjusted, curved computer keyboards and wrist-rests were provided, and the telephones
were replaced with audio headsets. Workers compensation costs dropped significantly. The
2
,©THEBRIGHT 2025 ALL RIGHTS RESERVED 11:11PM.
science of designing work spaces based on interaction between people and the equipment in
the work s - Answer✔Ergonomics
The emerging technologies applied to risk assessment and control link the physical domain to
the virtual domain. Together, these domains linked by the emerging technologies create a -
Answer✔Connected ecosystem
The National Oceanic and Atmospheric Administration (NOAA), a U.S. Government agency,
monitors tsunami risk. Earthquakes under the sea often cause large waves which can have a
disastrous impact on coastal communities. In addition to monitoring earthquake data and tides,
NOAA recently added a new tool -- tsunami detection buoys. The buoys are placed in the sea
and they are equipped with sensors to detect high wave levels so that an early warning can be
given to a coastal area if an evacuation is needed. This application of the use of smart products
illustrates their use in - Answer✔Catastrophe management
Which one of the following data capture tools has led to an explosion of risk management
innovation by allowing smart products to transmit data to each other and to central hubs? -
Answer✔Internet of Things
A municipal water plant installed water flow sensors and water pressure sensors on the water
pipes leaving the plant. The sensors make sure water is flowing properly and that there are no
leaks or clogs which could produce a loss. These types of sensors are - Answer✔Mechanical
sensors
Many auto manufacturers have automated a portion of their assembly lines by introducing a
smart product. The smart product performs repetitive tasks, such as making the same weld on
each vehicle frame as it passes the smart product. These smart products, which can be fixed or
mobile, reduce repetitive motion injuries that humans might suffer. They can also be used to
perform dangerous tasks and in heavy-lifting jobs. These smart products are called -
Answer✔Robots
Mutual Fund Company (MFC) offers a wide array of mutual fund options to investors. Each
mutual fund has a different fund objective and set of investment guidelines that apply to the
fund. While MFC gives considerable freedom to its fund portfolio managers, they are required
to abide by the fund's investment guidelines. To monitor compliance, MFC developed a
computer algorithm. The computer algorithm continuously monitors each fund's compliance
with investment guidelines. If a fund manager violates the investment guidelines, the computer
immediately notifies MFC's internal control director, and corrective action is taken. MFC's use
of the computer algorithm to monitor investment compliance and to provide notification when
corrective action is necessary illustrates use of - Answer✔Artificial intelligence
Clear-Rite Company specializes in the clean-up of hazardous chemical spills. Workers
performing clean-up operations must use safety suits to prevent exposure to the chemicals. The
suits include pulse and respiration monitors, body temperature sensors, and chemical sensors.
The monitors and sensors report data to a mobile operations center which is deployed to each
3
, ©THEBRIGHT 2025 ALL RIGHTS RESERVED 11:11PM.
clean-up site. The pulse and respiration monitors and the sensors that are part of the protective
gear are called - Answer✔Wearable technologies
Data Entry Company (DEC) offers customers data entry services. A customer can hire DEC to
enter survey data to be analyzed. Many DEC employees spend long hours entering data on a
computer. DEC has experienced neck strain and wrist pain complaints from their employees,
increasing the company's workers compensation costs. DEC investigated the complaints of its
data-entry employees. DEC adopted curved keyboards for data entry, wrist-rests for those
entering data, and uniform chair heights and display monitor heights to reduce neck strain
claims. The science of designing work spaces based on the health concerns of those who will
operate in the work space is called - Answer✔ergonomics
Risk managers today differ from traditional risk managers in which one of the following ways? -
Answer✔They attempt to minimize threats and optimize opportunities.
In an effort to reduce expenses, increase profitability, and reduce human errors; ABC Insurance
Company decided to automate most of its personal lines underwriting function. The company
now uses standardized application forms that are submitted electronically to one of the
company's regional offices. At each regional office, a computer with a scanner reads the
applications. The computer has been programmed with acceptable answers to the questions. If
the answers on the application are all acceptable, the policy is automatically issued. Rejected
applications are automatically forwarded to a human underwriter who reviews them. The use
of this technology has reduced the company's expense ratio by two and a half percent, and
reduced the time it takes to issue a policy. ABC Insurance Company's use of computers to
evaluate applications electronically is an application of - Answer✔Artificial intelligence
Which one of the following is described as a distributed database that serves as a collectively
shared ledger? - Answer✔Blockchain
Which one of the following statements is true regarding the evolution of risk and risk
management? - Answer✔The definition of risk has evolved to include positive as well as
negative attributes.
Which one of the following is a tool that can be used by fraud investigators to compare
documents and analyze notes? - Answer✔Text mining
The relationship between which two basic measures is critical for risk management in assessing
risk and deciding whether and how to manage it? - Answer✔Likelihood and consequences
Which one of the following statements is true regarding the basic measures that apply to risk
management? - Answer✔Consequences measure the degree to which an occurrence could
positively or negatively affect an organization.
Risk can be classified as subjective or objective. Which one of the following statements is
correct with respect to these risk classifications? - Answer✔Subjective risk can exist even where
objective risk does not.
4
CPCU 500 Exam Questions And Answers
2025 Update.
Southwest Interstate Railroad (SIR) is concerned about the number derailments in recent years.
It's not cost effective to use human assets to inspect tracks, bridges, and trestles. Instead, SIR
has started to use drones. A drone can fly low over tracks and above/below bridges and
trestles. The drones record video that is transmitted to corporate headquarters where it is
simultaneously scanned for derailment hazards. In the past six months, the drones detected a
track blockage caused by a rock slide and damage to tracks in a remote area cause by an
earthquake. SIR dispatched work crews to make the tracks once again passable, and no
derailments occurred. SIR's use of drones, video, real-term video scanning, and computer
analysis illustrates which one of the following? - Answer✔Preventative analytics
Autonomous Vehicle Applications (AVA) is a start-up company that develops safety
technologies that can be sold to companies that are producing autonomous vehicles. One
technology AVA is developing allows an autonomous vehicle to detect, extract, and analyze
images; and then to respond to the images. For example, the technology would detect a
presence in a crosswalk, extract the image, and a computer would analyze the image. When the
image was determined to be a human being, the vehicle would slow down or stop until the
crosswalk was clear. This technology, which is designed to capture and analyze images, and to
act on the recognition of the image; is called - Answer✔Computer vision
In addition to metal detectors, many airports have installed a second type of scanning
technology for checked baggage and cargo. The checked bags and cargo pass through a portal
with scanners programmed to detect and test for explosive trace fumes. These scanners, which
detect explosives based on air samples, are an example of what type of sensor used for risk
assessment and control? - Answer✔Biochemical sensors
Last year, three Metro City firemen died responding to a fire at a chemical plant, when they
were overcome by toxic fumes. In response, Metro City is purchasing advanced first responder
gear. It includes special flame retardant suits with chemical and explosive fume sensors, air
quality sensors, and heat sensors. Responders will also wear special watches that will track a
responder's pulse, respiration, and blood pressure; and helmets that include video cameras. All
of these sensors will feed data to a computer in real-time. The computer will analyze the data
and issue threat levels and evacuation orders, if necessary. The protective gear Metro City will
1
,©THEBRIGHT 2025 ALL RIGHTS RESERVED 11:11PM.
purchase and the data transmission and analysis capability illustrate the use of - Answer✔Smart
products
AMRM Insurance Company sells insurance in Virginia, North Carolina, South Carolina, and
Georgia. The company has compiled a policyowner data base that can be used to send text
messages when hurricanes approach. The company provides early warnings, storm updates
from the National Weather Service, and hurricane safety measures. The company credits the
system with reduced hurricane claims. The use of the texting system is an example of -
Answer✔Preventive analytics
Which one of the following statements is true with regard to preventive analytics? -
Answer✔Preventive analytics uses smart products and data analytics to identify root loss
causes and their implications.
Don is the Risk Manager for Rafferty Corporation. One of his peers, Sally, asks him one day,
"How do you define risk?" When Don replies, which one of the following statements is
accurate? - Answer✔Risk has different meanings within the risk management and insurance
communities.
The difference between risk tech and insurtech is - Answer✔Risk tech goes beyond insurtech by
expanding its focus to making risk financing more efficient and preventing and mitigating losses
in a variety of industries.
Catastrophes such as recent earthquakes and the 2011 tsunami in Japan pointed out a need for
many organizations to evaluate and manage their - Answer✔Supply-chain risk.
William is a risk manager for Green Mountain Trucking. He has always analyzed auto loss
frequency and severity rates for the fleet. William would like to collect data on vehicle speeds,
braking patterns, and distance traveled and compare that with the loss history. Which one of
the following would help William capture and analyze this data? - Answer✔Vehicle telematics
Which one of the following statements about the use of drones is true? - Answer✔Drones may
be equipped with cameras that relay data in real-time.
The traditional definition of risk management reflects the traditional concept of risk as -
Answer✔Negative
Take Your Order (TYO) is a company that specializes in taking product orders for vendors. The
manufacturer of a product can run a television or internet ad for a product with a toll-free
number. Customer calls for the products are routed to TYO, where one hundred operators are
available to receive the calls. Each operator is assigned a cubicle with a computer terminal,
video display monitor, and a telephone. TYO experienced high workers compensation claims
from its operators, claiming neck strain, eye strain, and wrist pain. In an effort to reduce such
injuries, TYO evaluated each operator's work area. The height of chairs and video monitors
were adjusted, curved computer keyboards and wrist-rests were provided, and the telephones
were replaced with audio headsets. Workers compensation costs dropped significantly. The
2
,©THEBRIGHT 2025 ALL RIGHTS RESERVED 11:11PM.
science of designing work spaces based on interaction between people and the equipment in
the work s - Answer✔Ergonomics
The emerging technologies applied to risk assessment and control link the physical domain to
the virtual domain. Together, these domains linked by the emerging technologies create a -
Answer✔Connected ecosystem
The National Oceanic and Atmospheric Administration (NOAA), a U.S. Government agency,
monitors tsunami risk. Earthquakes under the sea often cause large waves which can have a
disastrous impact on coastal communities. In addition to monitoring earthquake data and tides,
NOAA recently added a new tool -- tsunami detection buoys. The buoys are placed in the sea
and they are equipped with sensors to detect high wave levels so that an early warning can be
given to a coastal area if an evacuation is needed. This application of the use of smart products
illustrates their use in - Answer✔Catastrophe management
Which one of the following data capture tools has led to an explosion of risk management
innovation by allowing smart products to transmit data to each other and to central hubs? -
Answer✔Internet of Things
A municipal water plant installed water flow sensors and water pressure sensors on the water
pipes leaving the plant. The sensors make sure water is flowing properly and that there are no
leaks or clogs which could produce a loss. These types of sensors are - Answer✔Mechanical
sensors
Many auto manufacturers have automated a portion of their assembly lines by introducing a
smart product. The smart product performs repetitive tasks, such as making the same weld on
each vehicle frame as it passes the smart product. These smart products, which can be fixed or
mobile, reduce repetitive motion injuries that humans might suffer. They can also be used to
perform dangerous tasks and in heavy-lifting jobs. These smart products are called -
Answer✔Robots
Mutual Fund Company (MFC) offers a wide array of mutual fund options to investors. Each
mutual fund has a different fund objective and set of investment guidelines that apply to the
fund. While MFC gives considerable freedom to its fund portfolio managers, they are required
to abide by the fund's investment guidelines. To monitor compliance, MFC developed a
computer algorithm. The computer algorithm continuously monitors each fund's compliance
with investment guidelines. If a fund manager violates the investment guidelines, the computer
immediately notifies MFC's internal control director, and corrective action is taken. MFC's use
of the computer algorithm to monitor investment compliance and to provide notification when
corrective action is necessary illustrates use of - Answer✔Artificial intelligence
Clear-Rite Company specializes in the clean-up of hazardous chemical spills. Workers
performing clean-up operations must use safety suits to prevent exposure to the chemicals. The
suits include pulse and respiration monitors, body temperature sensors, and chemical sensors.
The monitors and sensors report data to a mobile operations center which is deployed to each
3
, ©THEBRIGHT 2025 ALL RIGHTS RESERVED 11:11PM.
clean-up site. The pulse and respiration monitors and the sensors that are part of the protective
gear are called - Answer✔Wearable technologies
Data Entry Company (DEC) offers customers data entry services. A customer can hire DEC to
enter survey data to be analyzed. Many DEC employees spend long hours entering data on a
computer. DEC has experienced neck strain and wrist pain complaints from their employees,
increasing the company's workers compensation costs. DEC investigated the complaints of its
data-entry employees. DEC adopted curved keyboards for data entry, wrist-rests for those
entering data, and uniform chair heights and display monitor heights to reduce neck strain
claims. The science of designing work spaces based on the health concerns of those who will
operate in the work space is called - Answer✔ergonomics
Risk managers today differ from traditional risk managers in which one of the following ways? -
Answer✔They attempt to minimize threats and optimize opportunities.
In an effort to reduce expenses, increase profitability, and reduce human errors; ABC Insurance
Company decided to automate most of its personal lines underwriting function. The company
now uses standardized application forms that are submitted electronically to one of the
company's regional offices. At each regional office, a computer with a scanner reads the
applications. The computer has been programmed with acceptable answers to the questions. If
the answers on the application are all acceptable, the policy is automatically issued. Rejected
applications are automatically forwarded to a human underwriter who reviews them. The use
of this technology has reduced the company's expense ratio by two and a half percent, and
reduced the time it takes to issue a policy. ABC Insurance Company's use of computers to
evaluate applications electronically is an application of - Answer✔Artificial intelligence
Which one of the following is described as a distributed database that serves as a collectively
shared ledger? - Answer✔Blockchain
Which one of the following statements is true regarding the evolution of risk and risk
management? - Answer✔The definition of risk has evolved to include positive as well as
negative attributes.
Which one of the following is a tool that can be used by fraud investigators to compare
documents and analyze notes? - Answer✔Text mining
The relationship between which two basic measures is critical for risk management in assessing
risk and deciding whether and how to manage it? - Answer✔Likelihood and consequences
Which one of the following statements is true regarding the basic measures that apply to risk
management? - Answer✔Consequences measure the degree to which an occurrence could
positively or negatively affect an organization.
Risk can be classified as subjective or objective. Which one of the following statements is
correct with respect to these risk classifications? - Answer✔Subjective risk can exist even where
objective risk does not.
4
