CPCU 500 (Becoming a Leader in Risk Management and Insurance) FINAL EXAM 1

CPCU 500 (Becoming a Leader in Risk Management
and Insurance) FINAL EXAM 1 QUESTIONS AND
CORRECT VERIFIED ANSWERS
Aimanufacturerireliesionisuppliesiofiaikeyirawimaterialiwhichiitiobtainsifromiaiparticularisu
pplier.iTheimanufacturerimakesiarrangementsiwithiaisecondisupplieritoiprovideitheirawima
terialiifiitheiprimaryisupplieriisiunableitoidoiso.iTheimanufactureriisipracticingiwhichioneio
fitheifollowingiriskicontrolitechniques?
Chooseioneianswer.
A.Diversification
B. Recoveryiplanning
C.Separation
D. Duplicationi-iCorrectiAnswer-iD.iDuplication


Aimanufacturerithatielectsitoidiscontinueiaiparticulariproductidueitoipotentialiliabilityilossie
xposuresiisipracticingiwhichioneiofitheifollowingiriskicontrolitechniques?
Chooseioneianswer.
A.Avoidance
B. Lossiprevention
C.Lossireduction




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,D. Separationi-iCorrectiAnswer-iA.iAvoidance


Airiskimanagementiprogramimustibeimonitorediandiperiodicallyirevised,iandithatirevisioniinvolvesif
ouristeps.iWhichioneiofitheifollowingiisioneiofithoseifouristeps?
Chooseioneianswer.
A.Establishiresults-basediratherithaniactivity-basedistandardsiofiiacceptableiperformance.
B. Compareiactualiresultsiwithitheiestablishediperformanceistandards.
C.Reduceianyiperformanceistandardsithatihaveinotibeeniachievedibyitheiactualiresults.
D. Returnitoitheifirstistepiinitheiriskimanagementiprocessitoiidentifyinewilossiexposures.i-
iCorrectiAnswer-iB.iCompareiactualiresultsiwithitheiestablishediperformanceistandards.




Achievingianyipost-
lossigoaliinvolvesiexpendingiriskimanagementiresources,iwhichimayiconflictiwithitheipre-
lossigoaliof
Chooseioneianswer.
A.Economyiofiioperations.
B. Earningsistability.
C.Socialiresponsibility.
D. Tolerableiuncertainty.i-iCorrectiAnswer-iA.iEconomyiofiioperations.


AniadvantageithatiretentionioffersianiindividualioriorganizationiisiChooseio
neianswer.
A.Incentiveifoririskicontrol.
B. Reductioniiniexposureitoilargeiloss.
C.Reductioniinicashiflowivariability.
D. Transferenceiofiiresponsibilityiforiclaimsiadministration.i-iCorrectiAnswer-
iA.iIncentiveifoririskicontrol.




Aniexampleiofiianiintangibleiassetithatianiindividualimayipossessiis




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,Chooseioneianswer.
A.Aniinvestmentiportfolio.
B.Aiuniqueiskilliset.
C.Moneyithatiisioweditoithem.
D. Airentaliproperty.i-iCorrectiAnswer-iB.iAiuniqueiskilliset.


AniorganizationithatihasiadoptedianiERMiapproachimonitorsirisks,ithreats,iandiopportunitiesithatiari
seifromiaivarietyiofisources.iTheitwoiimportantibenefitsiprovidedibyithisiapproachiversesitraditionalir
iskimanagementiareiimprovediriskicommunicationiand
Chooseioneianswer.
A.Centralizationiofiiriskiownership.
B. Increasedifocusionitransferiofiirisk.
C.Enhancedidecisionimaking.
D. Increasedifocusioniavoidanceiofiirisk.i-iCorrectiAnswer-iC.iEnhancedidecisionimaking.


AnotheritermiforicauseiofiilossiisiChoo
seioneianswer.
A.Negativeioutcome.
B. Exposure.
C.Peril.
D. Hazard.i-iCorrectiAnswer-iC.iPeril


Asiaisingleimotherioniaiveryitightibudget,iCiaraiisitempteditoiskimpioniheriinsurance.iHowever,iherifr
iendiMehmetitellsiherinotitoiskimpioniinsurance,ibecauseiitiwillihelpimanageihericashiflows.iWhichio
neiofitheifollowingiexamplesibestiillustratesiMehmet'sipoint?
Chooseioneianswer.
A.Ciaraifindsiitidifficultitoicomeiupiwithiai$787iautoiinsuranceipremiumieveryisiximonths.
B. Ciaraineedsihericaritoigetitoiherijob,iandisheineedsiherijobitoimakeicaripaymentsiandipayiforiheri
cariinsurance.




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, C.Whenihericar'sitransmissionigoesioutiaimonthiafteritheiwarrantyiexpires,iCiaraiisifacediwithiani$1
,100irepairibill.
D. Whenihericar'siwindshieldibreaks,iCiaraihasitoipayionlyi$100iofiithei$600icostiofiireplacingiit.i-
iCorrectiAnswer-iD.iWhenihericar'siwindshieldibreaks,iCiaraihasitoipayionlyi$100iofithe

$600icostiofiireplacingiit.


Businessicontinuityiisidesigneditoimeetibothitheiprimaryiriskimanagementiprogramipost-
lossigoalioficontinuityiofioperationiandithe
Chooseioneianswer.
A.Post-lossigoaliofiigrowth.
B. Post-lossigoaliofiisurvival.
C.Pre-lossigoaliofiieconomyiofiioperations.
D. Pre-lossigoaliofiisocialiresponsibility.i-iCorrectiAnswer-iB.iPost-lossigoaliofiisurvival.


Businessicontinuityimanagementiisiprimarilyidesigneditoimeetiwhichioneiofiitheifollowingiriskimana
gementigoals?
Chooseioneianswer.
A.Survival
B. Tolerableiuncertainty
C.Socialiresponsibility
D. Growthi-iCorrectiAnswer-iA.iSurvival


BusinessicontinuityimanagementiwasiinitiallyidevelopediwithiaifocusioniCh
ooseioneianswer.

A.Ethicaliconcerns.
B. Informationitechnologyiconcerns.
C.Terrorismiconcerns.
D. Lifeisafetyiconcerns.i-iCorrectiAnswer-iB.iInformationitechnologyiconcerns.




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