CPCU 500 Exam Study Guide Q-Bank Questions And Correct Answers Recent Uploaded

CPCU 500 Exam Study Guide Q-Bank Questions
And Correct Answers Recent Uploaded


Which one of the following statements is true regarding enterprise risk management (ERM)?
A. ERM is concerned with an organization's pure risk, primarily hazard risk.
B. The ERM framework encompasses all stakeholders in the organization.
C. In ERM, the risk management function is the responsibility of the safety manager.

D. ERM requires less communication than traditional risk management. - ANS ✔ - B. The ERM framework
encompasses all stakeholders in the organization.


A risk management plan that considers all of the risks that an organization faces, including operational, financial,
and strategic risks, is called
A. An enterprise risk management plan.
B. An open-perils risk management plan.
C. A protected cell risk management plan.

D. A hazard risk management plan. - ANS ✔ - A. An enterprise risk management plan.


The single largest impediment to successful implementation of an enterprise risk management (ERM) program is
Select one:
A. Traditional organizational culture with entrenched risk silos.
B. Lack of required skills to effectively implement an ERM program.
C. Lack of vision by the management team that leads to under-performance of the ERM plan and early
termination.

D. Opposition from stakeholders—employees, stockholders, customers, and suppliers. - ANS ✔ - A. Traditional
organizational culture with entrenched risk silos.


The consensus process by which the veracity of data is confirmed and verified is known as
Select one:
A. Telematics.

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,B. Machine learning.
C. The Internet of Things.

D. Mining. - ANS ✔ - D. Mining.


Which one of the following is a virtual ledger of data that has been verified, timestamped, encrypted, and
protected against tampering?
Select one:
A. Artificial intelligence
B. The Internet of Things
C. Closed-loop system

D. Blockchain - ANS ✔ - D. Blockchain


Which one of the following is the network through which sensors and other smart products capture and
transmit data?
Select one:
A. Blockchain
B. Cloud
C. Artificial intelligence

D. Internet of Things - ANS ✔ - D. Internet of Things


Insurers and risk managers can use the large volumes of data collected and organized through telematics to help
improve results for which one of the following types of insurance?
Select one:
A. Health
B. Workers compensation
C. Automobile

D. Property - ANS ✔ - C. Automobile


Organizations find it difficult to establish a benchmark against which the performance of their risk management
program can be assessed because it is difficult to assign a specific value to the


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,Select one:
A. Cost of implementing and administering risk management.
B. Cost of measures to prevent or reduce the size of potential losses.
C. Cost of residual uncertainty.

D. Cost of losses not reimbursed by insurance. - ANS ✔ - C. Cost of residual uncertainty.


The two benefits of risk management affecting individuals, organizations, and society are: it preserves financial
resources by reducing expected losses and it
Select one:
A. Reduces the residual uncertainty associated with risk.
B. Increases productivity within the economy and improves overall standard of living.
C. Increases the attractiveness to investors.

D. Improves the allocation of productive resources. - ANS ✔ - A. Reduces the residual uncertainty associated
with risk.


Which one of the following statements is true regarding risk management efforts on the part of individuals,
organizations, and society in general?
Select one:
A. Organizations tend to exhibit a greater degree of risk aversion than do individuals.
B. The benefits that risk management efforts provide to individuals and organizations are not felt by society in
general.
C. Risk management makes those who own or run an organization more willing to undertake risky activities.

D. Risk management tends to increase the deterrence effect of risk in organizations. - ANS ✔ - C. Risk
management makes those who own or run an organization more willing to undertake risky activities.


Risk management programs should
Select one:
A. Operate economically and efficiently.
B. Incur substantial costs for slight benefits.
C. Be an autonomous part of the organization.

D. Not use benchmarking to compare costs. - ANS ✔ - A. Operate economically and efficiently.

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, Which of the following risk management program goals is an essential goal for all public entities?
Select one:
A. Growth
B. Continuity of operations
C. Earning stability

D. Survival - ANS ✔ - B. Continuity of operations


Aligning risks with the organization's risk appetite defines
Select one:
A. Compliance.
B. Tolerable uncertainty.
C. Social responsibility.

D. Value at risk. - ANS ✔ - B. Tolerable uncertainty.


The second step in the risk management process is analyzing loss exposures. Which one of the following is true
regarding this step?
Select one:
A. Loss exposures are analyzed based on loss frequency, loss severity, total dollar losses, and timing in this step.
B. Loss exposures that could interfere with the achievement of the organization's goals are identified in this
step.
C. A weakness of loss exposure analysis is that it is useful only for those types of losses that an organization has
suffered in the past.

D. A major strength of loss exposure analysis is that the process is generally inexpensive. - ANS ✔ - A. Loss
exposures are analyzed based on loss frequency, loss severity, total dollar losses, and timing in this step.


Which one of the following is the first step in the risk management process?
Select one:
A. Examine the feasibility of risk management techniques
B. Monitor results and revise the risk management program


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