RMIN 4000-unit 1 test Questions and
answers graded A+
exposures - correct answer ✔✔things of value (assets) that could be lost
perils - correct answer ✔✔things that could happen to these assets
risk management - correct answer ✔✔what do you want to do to protect these assets and/or
prevent/reduce losses
risk of driving a car - correct answer ✔✔exposure: car
peril: car accident
risk management: drive safely
risk - correct answer ✔✔a calculated possibility of a negative outcome
calculated possibility - correct answer ✔✔a probabilistic outcome that is known/established
ranges from 0 to 1 (0%-100%)
0/0% = impossible.. no risk
.5/50% = highest risk.. most uncertainty
1/100% = certain event.. no risk
negative outcome - correct answer ✔✔loss, must be quantifiable ($$$)
, negative outcome example - correct answer ✔✔Your house burns down. Your house, clothes,
appliances, and furniture are quantifiable (you can approximate how much they are worth).
Pictures (memories) are not quantifiable
frequency - correct answer ✔✔how often a loss occurs
the number of losses that occur within a specific time period
probability of a loss
severity - correct answer ✔✔how much it costs when a loss occurs
the dollar amount of loss for a specific peril
frequency formula - correct answer ✔✔number of losses / number of exposures
severity formula - correct answer ✔✔total losses ($) / number of losses
peril - correct answer ✔✔cause of loss
ex: fire, tornado, burglary
hazard - correct answer ✔✔condition that creates or increases the frequency/severity of a loss
does NOT cause a loss
types of hazards - correct answer ✔✔physical, moral, morale (attitudinal), legal
physical hazard - correct answer ✔✔a physical condition that increases the frequency/severity
of loss
answers graded A+
exposures - correct answer ✔✔things of value (assets) that could be lost
perils - correct answer ✔✔things that could happen to these assets
risk management - correct answer ✔✔what do you want to do to protect these assets and/or
prevent/reduce losses
risk of driving a car - correct answer ✔✔exposure: car
peril: car accident
risk management: drive safely
risk - correct answer ✔✔a calculated possibility of a negative outcome
calculated possibility - correct answer ✔✔a probabilistic outcome that is known/established
ranges from 0 to 1 (0%-100%)
0/0% = impossible.. no risk
.5/50% = highest risk.. most uncertainty
1/100% = certain event.. no risk
negative outcome - correct answer ✔✔loss, must be quantifiable ($$$)
, negative outcome example - correct answer ✔✔Your house burns down. Your house, clothes,
appliances, and furniture are quantifiable (you can approximate how much they are worth).
Pictures (memories) are not quantifiable
frequency - correct answer ✔✔how often a loss occurs
the number of losses that occur within a specific time period
probability of a loss
severity - correct answer ✔✔how much it costs when a loss occurs
the dollar amount of loss for a specific peril
frequency formula - correct answer ✔✔number of losses / number of exposures
severity formula - correct answer ✔✔total losses ($) / number of losses
peril - correct answer ✔✔cause of loss
ex: fire, tornado, burglary
hazard - correct answer ✔✔condition that creates or increases the frequency/severity of a loss
does NOT cause a loss
types of hazards - correct answer ✔✔physical, moral, morale (attitudinal), legal
physical hazard - correct answer ✔✔a physical condition that increases the frequency/severity
of loss
