RMIN 5950 Exam 1 questions & answers
graded A+
Definition of Risk - correct answer ✔✔The variation in outcomes that could occur over a
specified period in a given situation
Probability - correct answer ✔✔An event's long-term frequency of occurrence (0-1)
Expected Value Calculation - correct answer ✔✔$Loss x P
Old view of RM - correct answer ✔✔Silo management of risk
Focus on risk transfer
Limited integration with processes
Scope limited to financial and hazard risks
Unclear link to corporate objectives
New view of RM - correct answer ✔✔Centralized management of risk
Portfolio effects
Competitive advantage
Included in budgets
Link to corporate objectives
What are the core functions of an organization? - correct answer ✔✔Strategic Management
(mission, goals, and objectives)
Operations Management (Activities towards mission)
, Risk Management (Activities that facilitate the most direct achievement of mission)
Hazard Risk - correct answer ✔✔Poses a level of threat to life, health, property or the
environment
Financial risks - correct answer ✔✔Risk that a company will not have adequate cash flow to
meet financial obligations
Operational risks - correct answer ✔✔Risk arising from the execution of a company's business
functions (people, systems, and processes)
Strategic risks - correct answer ✔✔Involved the most consequential risks the firm faces, their
likelihood, and their potential effect on credit
Pure premium - correct answer ✔✔The expected loss
Risk Premium - correct answer ✔✔Largest payment an individual will make to get rid of risk
Gross Premium - correct answer ✔✔Risk Premium + Pure Premium
What kind of utility curve do gamblers have? - correct answer ✔✔An s-shaped curve
What are the four sources of risk? - correct answer ✔✔Property Risk, Liability Risk, and Life
Health & Income Risk
Chance of Loss Formula - correct answer ✔✔(Probable # of losses)/Total # of exposures
graded A+
Definition of Risk - correct answer ✔✔The variation in outcomes that could occur over a
specified period in a given situation
Probability - correct answer ✔✔An event's long-term frequency of occurrence (0-1)
Expected Value Calculation - correct answer ✔✔$Loss x P
Old view of RM - correct answer ✔✔Silo management of risk
Focus on risk transfer
Limited integration with processes
Scope limited to financial and hazard risks
Unclear link to corporate objectives
New view of RM - correct answer ✔✔Centralized management of risk
Portfolio effects
Competitive advantage
Included in budgets
Link to corporate objectives
What are the core functions of an organization? - correct answer ✔✔Strategic Management
(mission, goals, and objectives)
Operations Management (Activities towards mission)
, Risk Management (Activities that facilitate the most direct achievement of mission)
Hazard Risk - correct answer ✔✔Poses a level of threat to life, health, property or the
environment
Financial risks - correct answer ✔✔Risk that a company will not have adequate cash flow to
meet financial obligations
Operational risks - correct answer ✔✔Risk arising from the execution of a company's business
functions (people, systems, and processes)
Strategic risks - correct answer ✔✔Involved the most consequential risks the firm faces, their
likelihood, and their potential effect on credit
Pure premium - correct answer ✔✔The expected loss
Risk Premium - correct answer ✔✔Largest payment an individual will make to get rid of risk
Gross Premium - correct answer ✔✔Risk Premium + Pure Premium
What kind of utility curve do gamblers have? - correct answer ✔✔An s-shaped curve
What are the four sources of risk? - correct answer ✔✔Property Risk, Liability Risk, and Life
Health & Income Risk
Chance of Loss Formula - correct answer ✔✔(Probable # of losses)/Total # of exposures
