Risk Management Exam 1 (A+ GRADED)

Donna has a home that is insured to its maximum value. She often leaves the door unlocked in case she forgets her keys. She knows that her insurance policy will pay for any losses if her home is robbed. Which of the following best applies to Donna? a. moral/morale hazard b. physical hazard c. societal hazard d. none of the above correct answers a. moral/morale hazard Loss frequency describes which of the following? a. number of losses b. financial impact of losses c. both the number and severity of losses d. none of the above correct answers a. number of losses Risk reduction methods are best applied to? a. High frequency losses. b.High severity losses. c. Both a. and b. d. neither a. nor b correct answers b.High severity losses. Why should we measure loss severity? a. risk classification b. determination of transfer (insurance) amount c. loss severity is never measured d. Both a. and b. correct answers d. Both a. and b. Which of the following is the last step in the risk management process (but often done first)? a. Identify Risks b. Review and Evaluate c. Determine Objectives d. Implement the decisions correct answers b. Review and Evaluate Risks affecting a large portion of the population at a given time are which of the following? a. hazard risks b. fundamental risks c. core risks d. particular risks correct answers b. fundamental risks