CRM PRINCIPLES OF RISK MANAGEMENT
EXAMINATION TEST 2026 QUESTIONS
WITH VERIFIED CORRECT ANSWERS
⩥ Types of risk. Answer: Pure and speculative
⩥ Pure. Answer: Chance of loss or no loss with no chance of gain
⩥ Speculative. Answer: Chance of loss or no loss or a chance of gain
often referred to as a business risk
⩥ Risk management terms. Answer: Exposure
Loss
Hazard
Peril
Incident
Accident
Occurrence
Claim
Frequency
Severity
Expected loss
,⩥ Exposure. Answer: Situation, practice, or condition that may lead to
an adverse financial consequence
⩥ Loss. Answer: Reduction in value
⩥ Hazard. Answer: Condition or circumstance that may give rise to a
loss from a given peril; physical, moral, or morale
⩥ Peril. Answer: The cause of loss
⩥ Incident. Answer: Event that disrupts normal activities and may
become a loss, claim, or business interruption
⩥ Total Cost Of Risk TCOR is used as risk management tool to assist
with:. Answer: 1. Making effective risk management decisions by
measuring progress toward risk management objectives
2. Establishing responsibility and accountability in the workplace,
providing management and employees incentives
3. Effective management of financial budgets and pricing of products
and services
4. Promoting and focusing on safety and loss control by communicating
the financial impact of a loss on the TCOR and sales and revenue
, ⩥ Steps to measure the impact of a loss on sales and revenue. Answer: 1.
Determine the profit margin of the organization
2. Divide the loss cost by the profit margin. The result is the
sales/revenue required to pay for the loss
⩥ Accident. Answer: An unplanned event that results in BI or PD
⩥ Occurrence. Answer: An accident that extends over a period of time
rather than a single observable happening
⩥ Claim. Answer: A demand or obligation for payment as a result of a
loss
⩥ Frequency. Answer: The number of losses occurring in a given time
period
⩥ Severity. Answer: The dollar amount of a given loss or the aggregate
dollar amount of all losses for a given period
⩥ Expected losses. Answer: Projection of the frequency and/or severity
of losses based on loss history, probability distribution, and statistics; the
expected loss projection is commonly called a loss pic or loss pick
EXAMINATION TEST 2026 QUESTIONS
WITH VERIFIED CORRECT ANSWERS
⩥ Types of risk. Answer: Pure and speculative
⩥ Pure. Answer: Chance of loss or no loss with no chance of gain
⩥ Speculative. Answer: Chance of loss or no loss or a chance of gain
often referred to as a business risk
⩥ Risk management terms. Answer: Exposure
Loss
Hazard
Peril
Incident
Accident
Occurrence
Claim
Frequency
Severity
Expected loss
,⩥ Exposure. Answer: Situation, practice, or condition that may lead to
an adverse financial consequence
⩥ Loss. Answer: Reduction in value
⩥ Hazard. Answer: Condition or circumstance that may give rise to a
loss from a given peril; physical, moral, or morale
⩥ Peril. Answer: The cause of loss
⩥ Incident. Answer: Event that disrupts normal activities and may
become a loss, claim, or business interruption
⩥ Total Cost Of Risk TCOR is used as risk management tool to assist
with:. Answer: 1. Making effective risk management decisions by
measuring progress toward risk management objectives
2. Establishing responsibility and accountability in the workplace,
providing management and employees incentives
3. Effective management of financial budgets and pricing of products
and services
4. Promoting and focusing on safety and loss control by communicating
the financial impact of a loss on the TCOR and sales and revenue
, ⩥ Steps to measure the impact of a loss on sales and revenue. Answer: 1.
Determine the profit margin of the organization
2. Divide the loss cost by the profit margin. The result is the
sales/revenue required to pay for the loss
⩥ Accident. Answer: An unplanned event that results in BI or PD
⩥ Occurrence. Answer: An accident that extends over a period of time
rather than a single observable happening
⩥ Claim. Answer: A demand or obligation for payment as a result of a
loss
⩥ Frequency. Answer: The number of losses occurring in a given time
period
⩥ Severity. Answer: The dollar amount of a given loss or the aggregate
dollar amount of all losses for a given period
⩥ Expected losses. Answer: Projection of the frequency and/or severity
of losses based on loss history, probability distribution, and statistics; the
expected loss projection is commonly called a loss pic or loss pick
