NAFA Risk Management Exam Questions
and Answers
Question 1
Who should be consulted in the decision to sue or settle?
Correct Answer
The best decision is made by closed consultation between the fleet manager,
attorney, risk manager, and financial advisors.
Question 2
What are the steps in risk management process?
Correct Answer
-Determine the goal of study,
-Identify all organizational risk and exposures,
-Quantify or measure the risk in terms of potential,
-likelihood and magnitude (frequency and severity),
-examine alternative strategies for managing the risk and/or paying for the losses
that are not avoided,
-choose and prioritize the most appropriate elimination and/or control strategies,
-plan and implement the most appropriate elimination and/or control strategies,
-once the program is implemented, communicate the results of the risk
management process throughout the organization,
-continually monitor the program for effectiveness and modify as necessary
Page 1 of 62
,Question 3
What are the five essential steps involved in the repair versus total decision?
Correct Answer
· Assess the damage,
· Establish vehicle pre-crash condition and worth,
· Secure and review repair estimates,
· Compare the Actual Cash Value (ACV) to repair estimates
Repair or total the vehicle
Question 4
What are the two types of documents needed to obtain an MVR?
Correct Answer
· A clear and conspicuous disclosure that a report may be requested must be
provided in a separate document. The purpose of this is to specifically prevent the
disclosure from being buried in an employment application.
The employer must obtain written consent from the applicant. Information
regulated under the Fair Credit Reporting ACT (FCRA) now includes any information
gathered and sold that may affect an individual ability to get or hold a job, that may
have a material effect on an individual's employment status, and a variety of other
purposes. Included under this expanded definition are MVRs
Question 5
Why is the impact of loss on cash flow important?
Correct Answer
Without the ability to generate cash, an entity will cease to exist.
Question 6
What are the two factors that characterize risk?
Correct Answer
According to the probability of occurrence frequency) and the magnitude or impact
of the future loss (severity).
Page 2 of 62
,Question 7
What are two decisions traps to avoid?
Correct Answer
· Psychological phenomenon "escalation psychology",
· Loss aversion
Question 8
What does the insurer do upon receipt of a claim?
Correct Answer
The insurance company will typically send out an investigator called an adjuster or
appraiser to assess damage. The insurance adjuster's job is to objectively evaluate
the insurance claim and determine if the repair estimates are reasonable.
Question 9
What are some of the attributes that risk manager should have?
Correct Answer
Sound judgmental skills to balance business and risk requirements,
· The ability to integrate risk management into strategic planning and day-to-day
business processes,
· Organizational and leadership skills,
· Communication skills,
· The risk manager's strategic and operational responsibilities include identification,
analysis, and mitigation of risk
Page 3 of 62
, Question 10
What is the best way to keep drivers from developing habits that make them more
vulnerable to crashes?
Correct Answer
A fleet safety program should include a battery of online lessons that teach and test
drivers on how to drive defensively. Lessons should be assigned whenever drivers'
risk scores pass defined thresholds.
Question 11
What is a rodeo?
Correct Answer
Is a driving competition that stresses the skills needed for safe vehicle operations
and rewards the most skilled drivers in each class.
Page 4 of 62
and Answers
Question 1
Who should be consulted in the decision to sue or settle?
Correct Answer
The best decision is made by closed consultation between the fleet manager,
attorney, risk manager, and financial advisors.
Question 2
What are the steps in risk management process?
Correct Answer
-Determine the goal of study,
-Identify all organizational risk and exposures,
-Quantify or measure the risk in terms of potential,
-likelihood and magnitude (frequency and severity),
-examine alternative strategies for managing the risk and/or paying for the losses
that are not avoided,
-choose and prioritize the most appropriate elimination and/or control strategies,
-plan and implement the most appropriate elimination and/or control strategies,
-once the program is implemented, communicate the results of the risk
management process throughout the organization,
-continually monitor the program for effectiveness and modify as necessary
Page 1 of 62
,Question 3
What are the five essential steps involved in the repair versus total decision?
Correct Answer
· Assess the damage,
· Establish vehicle pre-crash condition and worth,
· Secure and review repair estimates,
· Compare the Actual Cash Value (ACV) to repair estimates
Repair or total the vehicle
Question 4
What are the two types of documents needed to obtain an MVR?
Correct Answer
· A clear and conspicuous disclosure that a report may be requested must be
provided in a separate document. The purpose of this is to specifically prevent the
disclosure from being buried in an employment application.
The employer must obtain written consent from the applicant. Information
regulated under the Fair Credit Reporting ACT (FCRA) now includes any information
gathered and sold that may affect an individual ability to get or hold a job, that may
have a material effect on an individual's employment status, and a variety of other
purposes. Included under this expanded definition are MVRs
Question 5
Why is the impact of loss on cash flow important?
Correct Answer
Without the ability to generate cash, an entity will cease to exist.
Question 6
What are the two factors that characterize risk?
Correct Answer
According to the probability of occurrence frequency) and the magnitude or impact
of the future loss (severity).
Page 2 of 62
,Question 7
What are two decisions traps to avoid?
Correct Answer
· Psychological phenomenon "escalation psychology",
· Loss aversion
Question 8
What does the insurer do upon receipt of a claim?
Correct Answer
The insurance company will typically send out an investigator called an adjuster or
appraiser to assess damage. The insurance adjuster's job is to objectively evaluate
the insurance claim and determine if the repair estimates are reasonable.
Question 9
What are some of the attributes that risk manager should have?
Correct Answer
Sound judgmental skills to balance business and risk requirements,
· The ability to integrate risk management into strategic planning and day-to-day
business processes,
· Organizational and leadership skills,
· Communication skills,
· The risk manager's strategic and operational responsibilities include identification,
analysis, and mitigation of risk
Page 3 of 62
, Question 10
What is the best way to keep drivers from developing habits that make them more
vulnerable to crashes?
Correct Answer
A fleet safety program should include a battery of online lessons that teach and test
drivers on how to drive defensively. Lessons should be assigned whenever drivers'
risk scores pass defined thresholds.
Question 11
What is a rodeo?
Correct Answer
Is a driving competition that stresses the skills needed for safe vehicle operations
and rewards the most skilled drivers in each class.
Page 4 of 62
