RMI 2302 LATEST 2026 EXAM MANUAL QUESTIONS
AND SOLUTIONS GUARANTEE A+
✔✔Idiosyncratic view of risk - ✔✔
✔✔Systematic View of Risk - ✔✔
✔✔Controllable risk - ✔✔
✔✔Uncontrollable risk - ✔✔
✔✔Liberty vs. public policy - ✔✔
✔✔What information is ignored with average proababilities - ✔✔length of time exposed
to risk
impact of individual lifestyles on risk
where you are in life
✔✔alternative measure: # of days lost - ✔✔dying young has larger negative impact than
dying old
implies that public policy should be more concerneed with activities that cause fatalities
at younger ages
✔✔Risk reduction and public policy - ✔✔risk reduction has costs (monetary and non-
monetary)
requires putting a value on human life
✔✔Risk return trade off: innovation - ✔✔much of risk management is analyzing data to
determine the risk and reward associated with making decisions
if innovations make us feel safer, we may change our habits leading to additional risk
✔✔Necessary Activity and Guiding Principles for managing innovation risk -
✔✔necessary activity: create and use a model
Guiding principles
1) recognize model has limitations
2) be prepared - complications will arise that were not predicted by the model
3) pay attention to environment
✔✔Mathematical modeling - ✔✔mimic future outcomes
allows more precision than human cognition
humans can set mathematical models to execute on their behalf based on some
specific guidelines
more factors you incorporate, the better your assessment will be in deciding whether
and how to adopt a particular innovation
, ✔✔consequences of innovation - ✔✔changes in infrastructure lag changes in products
and services
humans likely most resistant to change
✔✔risks of self-drive cars - ✔✔hacking/hijacking/used as weapons
computer malfuntion
weather
moral choices
legal issues
technological costs, maintenance, repairs
✔✔rewards of self-drive cars - ✔✔lower costs for drivers
improved quality of life
fewer accidents and fatalitites
positive economic impacts
environmental
✔✔crypto risks - ✔✔not accessile to everyone
no reversing transactions
no asset protection
loss of access
traded currencies, highly volatile
✔✔crypto rewards - ✔✔no physical bills/coins
no intermediary needd
lower transaction costs
no need for government backing
anyone can create an account
transactions not limited to business hours
transactions secure
✔✔decision theory - ✔✔theory that provides a formal analytic framework for decision
making under conditions of uncertainty
used to determine optimal strategies where a decision maker is faced with several
alternatives and an uncertain, or risk, pattern of future events
✔✔steps of decision making process - ✔✔1) determine all possible future outcomes
2) determine all of the future choices the organization can make
3) combine the outcomes and choices into a matrix
4) select the choice from the menu determined in step 2 that fulfills some decision
criteria
✔✔One-stage decision making problems - ✔✔1. Identify courses of action in the face of
possible events
AND SOLUTIONS GUARANTEE A+
✔✔Idiosyncratic view of risk - ✔✔
✔✔Systematic View of Risk - ✔✔
✔✔Controllable risk - ✔✔
✔✔Uncontrollable risk - ✔✔
✔✔Liberty vs. public policy - ✔✔
✔✔What information is ignored with average proababilities - ✔✔length of time exposed
to risk
impact of individual lifestyles on risk
where you are in life
✔✔alternative measure: # of days lost - ✔✔dying young has larger negative impact than
dying old
implies that public policy should be more concerneed with activities that cause fatalities
at younger ages
✔✔Risk reduction and public policy - ✔✔risk reduction has costs (monetary and non-
monetary)
requires putting a value on human life
✔✔Risk return trade off: innovation - ✔✔much of risk management is analyzing data to
determine the risk and reward associated with making decisions
if innovations make us feel safer, we may change our habits leading to additional risk
✔✔Necessary Activity and Guiding Principles for managing innovation risk -
✔✔necessary activity: create and use a model
Guiding principles
1) recognize model has limitations
2) be prepared - complications will arise that were not predicted by the model
3) pay attention to environment
✔✔Mathematical modeling - ✔✔mimic future outcomes
allows more precision than human cognition
humans can set mathematical models to execute on their behalf based on some
specific guidelines
more factors you incorporate, the better your assessment will be in deciding whether
and how to adopt a particular innovation
, ✔✔consequences of innovation - ✔✔changes in infrastructure lag changes in products
and services
humans likely most resistant to change
✔✔risks of self-drive cars - ✔✔hacking/hijacking/used as weapons
computer malfuntion
weather
moral choices
legal issues
technological costs, maintenance, repairs
✔✔rewards of self-drive cars - ✔✔lower costs for drivers
improved quality of life
fewer accidents and fatalitites
positive economic impacts
environmental
✔✔crypto risks - ✔✔not accessile to everyone
no reversing transactions
no asset protection
loss of access
traded currencies, highly volatile
✔✔crypto rewards - ✔✔no physical bills/coins
no intermediary needd
lower transaction costs
no need for government backing
anyone can create an account
transactions not limited to business hours
transactions secure
✔✔decision theory - ✔✔theory that provides a formal analytic framework for decision
making under conditions of uncertainty
used to determine optimal strategies where a decision maker is faced with several
alternatives and an uncertain, or risk, pattern of future events
✔✔steps of decision making process - ✔✔1) determine all possible future outcomes
2) determine all of the future choices the organization can make
3) combine the outcomes and choices into a matrix
4) select the choice from the menu determined in step 2 that fulfills some decision
criteria
✔✔One-stage decision making problems - ✔✔1. Identify courses of action in the face of
possible events
