AINS 21 - Segment C Exam UPDATED
Study ACTUAL QUESTIONS AND
CORRECT ANSWERS
Traditionally, the risk management professional's role has been associated with loss
exposures related to
A. Pure risk.
B. Speculative risk.
C. Operational risk.
D. Business risk. - CORRECT ANSWER A. Pure risk.
Risk management activities under the enterprise-wide risk management approach occur at the
A. Regional level.
B. Departmental level.
C. Enterprise level.
D. Business unit level. - CORRECT ANSWER C. Enterprise level.
Which one of the following is true regarding enterprise-wide risk management (ERM)?
A. ERM is an approach to managing all of an organization's key risks and opportunities.
B. Implementation of ERM is fairly consistent among organizations, regardless of their size,
nature, or complexity.
C. ERM is an approach to risk management that focuses primarily on loss exposures
associated with pure risk.
D. In practice, implementation of ERM occurs at the departmental or business unit level. -
CORRECT ANSWER A. ERM is an approach to managing all of an organization's key
risks and opportunities.
Which one of the following lists the steps in the risk management process in the correct
order?
A. Identify loss exposures, analyze loss exposures, examine techniques, select techniques,
implement techniques, monitor, and revise the program
,B. Implement techniques, monitor and revise the program, identify loss exposures, analyze
loss exposures, examine techniques, and select techniques
C. Identify loss exposures, analyze loss exposures, select techniques, examine techniques,
implement techniques, monitor, and revise the program
D. Select techniques, examine techniques, identify loss exposures, analyze loss exposures,
implement techniques, monitor, and revise the program - CORRECT ANSWER A.
Identify loss exposures, analyze loss exposures, examine techniques, select techniques,
implement techniques, monitor, and revise the program
Which one of the following is the goal of enterprise-wide risk management (ERM)?
A. Reduce risk management costs
B. Decentralize control of business decisions
C. Maximize the organization's value
D. Coordinate loss reduction efforts - CORRECT ANSWER C. Maximize the
organization's value
Loss histories can offer great insight into an organization's loss exposures. The problem with
depending too heavily on this one source is that some past events might
A. Have been insured.
B. Not have been recorded.
C. Not have been insured.
D. Still be unresolved. - CORRECT ANSWER B. Not have been recorded.
It is easier to gauge the potential severity of property losses than of liability losses because
property loss exposures
A. Are confined to the building and contents.
B. Can be determined as an average according to the type of business.
C. Typically have a finite value.
D. Have a calculable frequency. - CORRECT ANSWER C. Typically have a finite
value.
,Loss exposure surveys or checklists are comprehensive and apply to almost any organization.
The survey's major weakness is that they
A. Have to be custom designed for each business.
B. May omit an important exposure.
C. Are expensive.
D. Take too long to complete - CORRECT ANSWER B. May omit an important
exposure.
The dollar amount of damage that results from a loss is the loss
A. Severity.
B. Reduction.
C. Frequency.
D. Prevention. - CORRECT ANSWER A. Severity.
The last step in the risk management process is to
A. Implement the selected technique.
B. Identify loss exposures.
C. Select the appropriate technique.
D. Monitor results. - CORRECT ANSWER D. Monitor results.
Jane's son, Joe, is 15-years-old and he will obtain his driver's license this summer when he
becomes 16. Joe has expressed an interest in driving Jane's car once he has his license. Jane
owns a compact car and is concerned that Joe might be hurt if he is involved in an accident
while driving her car. Jane has read reports indicating that people occupying sport utility
vehicles suffer less severe injuries when involved in accidents. If Jane trades her compact car
in for a sport utility vehicle, which one of the following risk management techniques will she
be applying?
A. Avoidance
B. Loss reduction
C. Noninsurance transfer
D. Loss prevention - CORRECT ANSWER B. Loss reduction
, Alan Peachtree owns a hobby shop, which he runs from a detached garage on his property.
Alan has set aside funds to pay for possible property losses rather than purchasing insurance.
Which one of the following risk management techniques is Alan using?:
A. Loss control
B. Avoidance
C. Retention
D. Non-Insurance transfer - CORRECT ANSWER C. Retention
A business buys multiple small warehouses to minimize the effects of a single loss. This is an
example of
A. Separation.
B. Avoidance.
C. Loss prevention.
D. Duplication. - CORRECT ANSWER A. Separation.
Waking up on a cold February morning, Amy discovers the roads are icy and snow covered.
Concerned about driving to work and possibly having an accident, she decides to take the day
off. Amy's decision is an example of which one of the following risk management
techniques?
A. Loss reduction
B. Separation
C. Loss prevention
D. Avoidance - CORRECT ANSWER D. Avoidance
Martha works in the city and drives to work each day. She is concerned about her auto
exposures due to driving in the city. If Martha sells her vehicle and begins using public
transportation, which one of the following risk management techniques will she be applying
to her situation?
A. Avoidance
B. Noninsurance transfer
C. Loss control
Study ACTUAL QUESTIONS AND
CORRECT ANSWERS
Traditionally, the risk management professional's role has been associated with loss
exposures related to
A. Pure risk.
B. Speculative risk.
C. Operational risk.
D. Business risk. - CORRECT ANSWER A. Pure risk.
Risk management activities under the enterprise-wide risk management approach occur at the
A. Regional level.
B. Departmental level.
C. Enterprise level.
D. Business unit level. - CORRECT ANSWER C. Enterprise level.
Which one of the following is true regarding enterprise-wide risk management (ERM)?
A. ERM is an approach to managing all of an organization's key risks and opportunities.
B. Implementation of ERM is fairly consistent among organizations, regardless of their size,
nature, or complexity.
C. ERM is an approach to risk management that focuses primarily on loss exposures
associated with pure risk.
D. In practice, implementation of ERM occurs at the departmental or business unit level. -
CORRECT ANSWER A. ERM is an approach to managing all of an organization's key
risks and opportunities.
Which one of the following lists the steps in the risk management process in the correct
order?
A. Identify loss exposures, analyze loss exposures, examine techniques, select techniques,
implement techniques, monitor, and revise the program
,B. Implement techniques, monitor and revise the program, identify loss exposures, analyze
loss exposures, examine techniques, and select techniques
C. Identify loss exposures, analyze loss exposures, select techniques, examine techniques,
implement techniques, monitor, and revise the program
D. Select techniques, examine techniques, identify loss exposures, analyze loss exposures,
implement techniques, monitor, and revise the program - CORRECT ANSWER A.
Identify loss exposures, analyze loss exposures, examine techniques, select techniques,
implement techniques, monitor, and revise the program
Which one of the following is the goal of enterprise-wide risk management (ERM)?
A. Reduce risk management costs
B. Decentralize control of business decisions
C. Maximize the organization's value
D. Coordinate loss reduction efforts - CORRECT ANSWER C. Maximize the
organization's value
Loss histories can offer great insight into an organization's loss exposures. The problem with
depending too heavily on this one source is that some past events might
A. Have been insured.
B. Not have been recorded.
C. Not have been insured.
D. Still be unresolved. - CORRECT ANSWER B. Not have been recorded.
It is easier to gauge the potential severity of property losses than of liability losses because
property loss exposures
A. Are confined to the building and contents.
B. Can be determined as an average according to the type of business.
C. Typically have a finite value.
D. Have a calculable frequency. - CORRECT ANSWER C. Typically have a finite
value.
,Loss exposure surveys or checklists are comprehensive and apply to almost any organization.
The survey's major weakness is that they
A. Have to be custom designed for each business.
B. May omit an important exposure.
C. Are expensive.
D. Take too long to complete - CORRECT ANSWER B. May omit an important
exposure.
The dollar amount of damage that results from a loss is the loss
A. Severity.
B. Reduction.
C. Frequency.
D. Prevention. - CORRECT ANSWER A. Severity.
The last step in the risk management process is to
A. Implement the selected technique.
B. Identify loss exposures.
C. Select the appropriate technique.
D. Monitor results. - CORRECT ANSWER D. Monitor results.
Jane's son, Joe, is 15-years-old and he will obtain his driver's license this summer when he
becomes 16. Joe has expressed an interest in driving Jane's car once he has his license. Jane
owns a compact car and is concerned that Joe might be hurt if he is involved in an accident
while driving her car. Jane has read reports indicating that people occupying sport utility
vehicles suffer less severe injuries when involved in accidents. If Jane trades her compact car
in for a sport utility vehicle, which one of the following risk management techniques will she
be applying?
A. Avoidance
B. Loss reduction
C. Noninsurance transfer
D. Loss prevention - CORRECT ANSWER B. Loss reduction
, Alan Peachtree owns a hobby shop, which he runs from a detached garage on his property.
Alan has set aside funds to pay for possible property losses rather than purchasing insurance.
Which one of the following risk management techniques is Alan using?:
A. Loss control
B. Avoidance
C. Retention
D. Non-Insurance transfer - CORRECT ANSWER C. Retention
A business buys multiple small warehouses to minimize the effects of a single loss. This is an
example of
A. Separation.
B. Avoidance.
C. Loss prevention.
D. Duplication. - CORRECT ANSWER A. Separation.
Waking up on a cold February morning, Amy discovers the roads are icy and snow covered.
Concerned about driving to work and possibly having an accident, she decides to take the day
off. Amy's decision is an example of which one of the following risk management
techniques?
A. Loss reduction
B. Separation
C. Loss prevention
D. Avoidance - CORRECT ANSWER D. Avoidance
Martha works in the city and drives to work each day. She is concerned about her auto
exposures due to driving in the city. If Martha sells her vehicle and begins using public
transportation, which one of the following risk management techniques will she be applying
to her situation?
A. Avoidance
B. Noninsurance transfer
C. Loss control
