CPCU 500 Exam Questions and Answers Grade A+
machine learning - Answer-form of AI where the computer initially teaches itself to learn from
history and new data
risk - Answer-possibility of loss or injury, and the uncertainty of outcomes
possibility - Answer-something that may happen
probability - Answer-liklihood of something happening
two elements of risk - Answer-uncertainty of outcome and negative outcomes
quadrants of risk - Answer-hazard, operational, financial and strategic
subjective risk - Answer-a persons perception of risk
objective risk - Answer-measurable level of risk
three elements to a loss exposure - Answer-awareness, control and perception
four types of loss exposures - Answer-legal hazard, moral hazard, morale hazard and physical
hazard
cost of loss - Answer-financial consequence of incurring a loss and or the monetary loss caused
by a loss exposure
four types of loss exposures - Answer-liability, net income, personnel and property
liability loss exposure - Answer-possibility of financial loss caused by legal action against a
person or organization
liability loss exposure asset at risk of loss - Answer-tangible or intangible item of value owned by
an individual or organization subject to loss
net income loss exposure - Answer-possibility of financial loss caused by a reduction in net
income
net income asset at risk of loss - Answer-risk that a company will lose money and future income
will decline
net income cause of loss - Answer-cause of loss is the result of a direct loss like liability loss,
personnel loss or property loss
net income cost of loss - Answer-financial consequence of incurring a loss
three property costs of loss - Answer-added expenses, income lost, property value
,risk management process - Answer-1. identify loss exposures
2. prioritize loss exposures
3. explore risk management techniques
4. choose a risk management technique
5. apply risk management technique
6. revise the program periodically
how does rm benefit the individual - Answer-eliminates and reduces losses
less residual uncertainty
how does rm benefit the organization - Answer-financial protection-unanticipated events do not
cripple the organization
reduces uncertainty of risk
risk management goals - Answer-growth and profitability
continue operations
economy of operations
legal obligations
risk acceptability
social responsibility
stable earnings
survival
economy of operations - Answer-cost effective measures that result in the greatest benefit to
the organization
how does the rm goal of legal obligations conflict with other goals - Answer-some rm measures
are expensive but required by law
so, economy of operations and efficiency
how does the goal of continuing operations conflict with other goals - Answer-companies will
incur increased expenses to keep operations uninterrupted
, how does the goal of risk acceptability conflict with other goals - Answer-growth required the
business to take on extra risk
define enterprise risk management - Answer-designed to encompass both pure and speculative
risk in order to manage all risks by an organization
purpose of erm is to maximize shareholder value by managing and exploiting risk and
opportunities
define traditional risk management - Answer-only focuses on pure risk with primary focus being
on hazard risk
what are the three pillars of erm - Answer-correlation, interdependence and portfolio theory
correlation - Answer-mutual connection between two or more things
correlation increases risk
Interdependence - Answer-two events depend on one another
trm doesnt recognize this
portfolio theory - Answer-portfolio is a combination of risks
obstacles to erm - Answer-employee acceptance
property tech
taking responsibility
three areas of data and tech that have advanced RM - Answer-analyzing data
retrieving data
storing data
internet of things - Answer-network of objects connected to the internet that send, receive and
transmit data to computers
smart products - Answer-items that collect, process and transmit data
telematics - Answer-device used by insurers to collect driving data about an insured
closed loop - Answer-automatic control system that completes a full path of information flow
blockchain - Answer-digitized and decentralized public record of all virtual currency transactions
machine learning - Answer-form of AI where the computer initially teaches itself to learn from
history and new data
risk - Answer-possibility of loss or injury, and the uncertainty of outcomes
possibility - Answer-something that may happen
probability - Answer-liklihood of something happening
two elements of risk - Answer-uncertainty of outcome and negative outcomes
quadrants of risk - Answer-hazard, operational, financial and strategic
subjective risk - Answer-a persons perception of risk
objective risk - Answer-measurable level of risk
three elements to a loss exposure - Answer-awareness, control and perception
four types of loss exposures - Answer-legal hazard, moral hazard, morale hazard and physical
hazard
cost of loss - Answer-financial consequence of incurring a loss and or the monetary loss caused
by a loss exposure
four types of loss exposures - Answer-liability, net income, personnel and property
liability loss exposure - Answer-possibility of financial loss caused by legal action against a
person or organization
liability loss exposure asset at risk of loss - Answer-tangible or intangible item of value owned by
an individual or organization subject to loss
net income loss exposure - Answer-possibility of financial loss caused by a reduction in net
income
net income asset at risk of loss - Answer-risk that a company will lose money and future income
will decline
net income cause of loss - Answer-cause of loss is the result of a direct loss like liability loss,
personnel loss or property loss
net income cost of loss - Answer-financial consequence of incurring a loss
three property costs of loss - Answer-added expenses, income lost, property value
,risk management process - Answer-1. identify loss exposures
2. prioritize loss exposures
3. explore risk management techniques
4. choose a risk management technique
5. apply risk management technique
6. revise the program periodically
how does rm benefit the individual - Answer-eliminates and reduces losses
less residual uncertainty
how does rm benefit the organization - Answer-financial protection-unanticipated events do not
cripple the organization
reduces uncertainty of risk
risk management goals - Answer-growth and profitability
continue operations
economy of operations
legal obligations
risk acceptability
social responsibility
stable earnings
survival
economy of operations - Answer-cost effective measures that result in the greatest benefit to
the organization
how does the rm goal of legal obligations conflict with other goals - Answer-some rm measures
are expensive but required by law
so, economy of operations and efficiency
how does the goal of continuing operations conflict with other goals - Answer-companies will
incur increased expenses to keep operations uninterrupted
, how does the goal of risk acceptability conflict with other goals - Answer-growth required the
business to take on extra risk
define enterprise risk management - Answer-designed to encompass both pure and speculative
risk in order to manage all risks by an organization
purpose of erm is to maximize shareholder value by managing and exploiting risk and
opportunities
define traditional risk management - Answer-only focuses on pure risk with primary focus being
on hazard risk
what are the three pillars of erm - Answer-correlation, interdependence and portfolio theory
correlation - Answer-mutual connection between two or more things
correlation increases risk
Interdependence - Answer-two events depend on one another
trm doesnt recognize this
portfolio theory - Answer-portfolio is a combination of risks
obstacles to erm - Answer-employee acceptance
property tech
taking responsibility
three areas of data and tech that have advanced RM - Answer-analyzing data
retrieving data
storing data
internet of things - Answer-network of objects connected to the internet that send, receive and
transmit data to computers
smart products - Answer-items that collect, process and transmit data
telematics - Answer-device used by insurers to collect driving data about an insured
closed loop - Answer-automatic control system that completes a full path of information flow
blockchain - Answer-digitized and decentralized public record of all virtual currency transactions
