CAIB 1 / CH 1 / SEC 1 / STUDY GUIDE
EXAM WITH VERIFIED SOLUTIONS
Define min mpure minsurance mterms m"risk" m- mcorrect manswers m-The mchance mof
mfinancial mloss mto mwhich man mobject mof minsurance mis mexposed
List mthe m3 mcategories mof mrisk mgenerally mfaced mby mpeople m- mcorrect
manswers m-Personal mRisk; mProperty mRisk; mLiability mRisk
State m4 mpossible moptions mpeople mcan mchoose mto mdeal mwith mrisk m- mcorrect
manswers m-Avoidance mof mRisk; mControlling mRisk; mRetention mof mRisk;
mTransfer mof mRisk
Give ma mbrief mexplanation mand mexample mof mAvoidance mof mRisk m- mcorrect
manswers m-When mchance mof mfinancial mloss mis meliminated. m(Ex. mPeople mwho
mrent mrather mthan mpurchase mtheir mown mbusiness mpremises mavoid mthe
mchance mof mfinancial mloss mfrom mthe mownership mof mthat mproperty)
Give ma mbrief mexplanation mand mexample mof mControlling mRisk m- mcorrect
manswers m-Taking mmeasures mto mreduce mthe mfrequency mand mseverity mof
mlosses. m(Ex. mIntrusion mDetection mAlarms, mFire mAlarms)
, Give ma mbrief mexplanation mand mexample mof mRetention mof mRisk m- mcorrect
manswers m-Large mcorporations msuch mas mCanadian mPacific, mCanadian
mNational mRailways, massume mfinancial mresponsibility mfor mtheir mown mlosses.
mThis mis mgenerally mless mexpensive mthan mother moptions mavailable mto mthem
Give ma mbrief mexplanation mand mexample mof mTransfer mof mRisk m- mcorrect
manswers m-A mperson munable mto mwithstand mthe mfinancial mconsequences mof
ma mpotential mloss m"transfer mall" mor ma mportion mof mtheir mrisk. mInsurance
mcompanies musually magree mto massume mthe mfinancial mresponsibility mof
mpersons mfor mtheir mlosses
Give m2 mexamples mof mloss mcontrol mmeasures mthat mcan mbe mtaken mto
mreduce mfrequency mand mseverity mof mlosses m- mcorrect manswers m-Intrusion
mDetection mAlarms; mFire mDetection mAlarms
State m2 mreasons mwhy mloss mcontrol mmeasures mare mnot ma mtotal msolution min
meliminating mfinancial mloss m- mcorrect manswers m-Equipment mmay mnot mwork
m100% mof mthe mtime; mlosses msuch mas mwind, mhail mand mlightning mcannot mbe
mcontrolled
Which mof mthe m4 mpossible moptions mis mgenerally mnot man meffective mmeans mof
mdealing mwith mrisk m- mcorrect manswers m-Avoidance mof mRisk. mIn mmost mcases,
mexposure mto mfinancial mloss mis msimply mreplaced mwith manother
Which mof mthe m4 mpossible moptions mis mthe mmost mpopular mand mpractical
mmeans mof mdealing mwith mrisk m- mcorrect manswers m-Transfer mof mRisk
Explain, musing man mexample, m"speculative mrisk" m- mcorrect manswers m-The
mchance mof mfinancial mloss mor mgain m(placing ma mbet mat ma mBlack mJack mtable)
Explain, musing man mexample, m"pure mrisk" m- mcorrect manswers m-The mchance
mof mfinancial mloss mwith mno mchance mof mfinancial mgain m(hail mdamage mto
myour mroof)
Which mtype mof mrisk mwill minsurers mnot mprovide man minsurance mpolicy mfor m-
mcorrect manswers m-Speculative mRisk
A mcontract mis man magreement mbetween m2 mor mmore mpersons mwhich mcreates
man mobligation mto mdo mor mnot mdo ma mcertain mparticular mthing. mAll mcontracts
mcontain m5 melements. mWhat mare mthey? m- mcorrect manswers m-Agreement;
mConsideration; mLegality mof mObject; mLegal mCapacity mof mthe mParties mto
mContract; mGenuine mIntention
Explain m"Agreement" m- mcorrect manswers m-A mmeeting mof mthe mminds
Explain m"Legality mof mObject" m- mcorrect manswers m-A mcontract mintended mfor ma
mpurpose mwhich mis mcontrary mto mpublic mpolicy mis mnot menforceable mby mlaw
EXAM WITH VERIFIED SOLUTIONS
Define min mpure minsurance mterms m"risk" m- mcorrect manswers m-The mchance mof
mfinancial mloss mto mwhich man mobject mof minsurance mis mexposed
List mthe m3 mcategories mof mrisk mgenerally mfaced mby mpeople m- mcorrect
manswers m-Personal mRisk; mProperty mRisk; mLiability mRisk
State m4 mpossible moptions mpeople mcan mchoose mto mdeal mwith mrisk m- mcorrect
manswers m-Avoidance mof mRisk; mControlling mRisk; mRetention mof mRisk;
mTransfer mof mRisk
Give ma mbrief mexplanation mand mexample mof mAvoidance mof mRisk m- mcorrect
manswers m-When mchance mof mfinancial mloss mis meliminated. m(Ex. mPeople mwho
mrent mrather mthan mpurchase mtheir mown mbusiness mpremises mavoid mthe
mchance mof mfinancial mloss mfrom mthe mownership mof mthat mproperty)
Give ma mbrief mexplanation mand mexample mof mControlling mRisk m- mcorrect
manswers m-Taking mmeasures mto mreduce mthe mfrequency mand mseverity mof
mlosses. m(Ex. mIntrusion mDetection mAlarms, mFire mAlarms)
, Give ma mbrief mexplanation mand mexample mof mRetention mof mRisk m- mcorrect
manswers m-Large mcorporations msuch mas mCanadian mPacific, mCanadian
mNational mRailways, massume mfinancial mresponsibility mfor mtheir mown mlosses.
mThis mis mgenerally mless mexpensive mthan mother moptions mavailable mto mthem
Give ma mbrief mexplanation mand mexample mof mTransfer mof mRisk m- mcorrect
manswers m-A mperson munable mto mwithstand mthe mfinancial mconsequences mof
ma mpotential mloss m"transfer mall" mor ma mportion mof mtheir mrisk. mInsurance
mcompanies musually magree mto massume mthe mfinancial mresponsibility mof
mpersons mfor mtheir mlosses
Give m2 mexamples mof mloss mcontrol mmeasures mthat mcan mbe mtaken mto
mreduce mfrequency mand mseverity mof mlosses m- mcorrect manswers m-Intrusion
mDetection mAlarms; mFire mDetection mAlarms
State m2 mreasons mwhy mloss mcontrol mmeasures mare mnot ma mtotal msolution min
meliminating mfinancial mloss m- mcorrect manswers m-Equipment mmay mnot mwork
m100% mof mthe mtime; mlosses msuch mas mwind, mhail mand mlightning mcannot mbe
mcontrolled
Which mof mthe m4 mpossible moptions mis mgenerally mnot man meffective mmeans mof
mdealing mwith mrisk m- mcorrect manswers m-Avoidance mof mRisk. mIn mmost mcases,
mexposure mto mfinancial mloss mis msimply mreplaced mwith manother
Which mof mthe m4 mpossible moptions mis mthe mmost mpopular mand mpractical
mmeans mof mdealing mwith mrisk m- mcorrect manswers m-Transfer mof mRisk
Explain, musing man mexample, m"speculative mrisk" m- mcorrect manswers m-The
mchance mof mfinancial mloss mor mgain m(placing ma mbet mat ma mBlack mJack mtable)
Explain, musing man mexample, m"pure mrisk" m- mcorrect manswers m-The mchance
mof mfinancial mloss mwith mno mchance mof mfinancial mgain m(hail mdamage mto
myour mroof)
Which mtype mof mrisk mwill minsurers mnot mprovide man minsurance mpolicy mfor m-
mcorrect manswers m-Speculative mRisk
A mcontract mis man magreement mbetween m2 mor mmore mpersons mwhich mcreates
man mobligation mto mdo mor mnot mdo ma mcertain mparticular mthing. mAll mcontracts
mcontain m5 melements. mWhat mare mthey? m- mcorrect manswers m-Agreement;
mConsideration; mLegality mof mObject; mLegal mCapacity mof mthe mParties mto
mContract; mGenuine mIntention
Explain m"Agreement" m- mcorrect manswers m-A mmeeting mof mthe mminds
Explain m"Legality mof mObject" m- mcorrect manswers m-A mcontract mintended mfor ma
mpurpose mwhich mis mcontrary mto mpublic mpolicy mis mnot menforceable mby mlaw
