CISR Elements of Risk Management QUESTIONS WITH
ANSWERS RATED A+
1. Reinterpretation of a law causes your company to modify manufacturing procedures. Which
one of the general classes of risk does the example illustrate?
Juridical
Legal
Political
Economic - Legal
2. The losses incurred from a tree falling and blocking the entrance to a major retail store owned
by your company would fall under which logical classification of risk?
Net income
Liability
Property
Human resources - Net income
3. Martha is building her risk management team. She is looking for a team member who can help
her calculate development factors. This duty would be performed by which of the following team
members?
Accountant
Agent or broker
Actuary
RMIS provider - Actuary
4. The four logical classifications of exposures are used during the __________ step of the risk
management process.
Identification
Analysis
Administration
Control - Identification
5. Nicholas believes that the risk control program he has implemented will greatly reduce the
frequency and severity of losses at his company. He now wants to choose an insurance plan that
will be the most cost-effective, taking into consideration the lower frequency and severity of
losses, while maintaining some carrier services. Which plan would he choose?
Deductible Plan
Dividend Plan
Guaranteed Cost Plan
Self-Insurance - Deductible Plan
6. Which one of the following does not demonstrate a purpose of quantitative analysis?
Using loss data to determine what caused the "back strain" losses.
Using loss data to assist in forecasting next year's slip-and-fall losses.
,You use loss data to decide which risks should be transferred to the insurance company.
Using loss data to determine which improvement projects to fund. - Using loss data to determine
what caused the "back strain" losses.
7. The definition of ___________ is any conscious action or inaction to minimize, at the optimal
cost, the probability, frequency, severity, or unpredictability of loss.
Risk Administration
Risk Control
Risk Analysis
Risk Financing - Risk Control
8. You want to use a risk identification method that helps you examine values subject to loss and
fiscal impacts after a loss. Which method would you use?
Physical inspections
Loss data analysis
Experts
Financial statement analysis - Financial statement analysis
9. The benefits of this risk identification method include standardization, easy data classification
and tabulation, and because little training is required, utilization by non-risk management
personnel. Which risk identification method does this describe?
Flowchart review
Expert review
Insurance Policy Review
Checklists and surveys - Checklists and surveys
10. By reviewing loss reports to uncover why losses happened, you are:
determining the loss pick
determining the cost of risk
conducting a qualitative analysis
conducting a quantitative analysis - conducting a qualitative analysis
11. A company outsources the shipping of its product so that it no longer has a transportation
exposure. This illustrates which risk control technique?
Prevention
Transfer
Reduction
Avoidance - Transfer
12. A company stores its finished inventory in regional locations. This illustrates which risk
control technique?
Separation
Segregation
Duplication
Transfer - Separation
, 13. Lindsay's company has an insurance plan in which they may see some returned premium
based on their actual losses. Lindsay's company has a ___________.
Guaranteed Cost Plan
Deductible Plan
Self-Insurance Plan
Dividend Plan - Dividend Plan
14. From the perspective of a __________, an insurable risk is one which generates enough
premium paid by the many to pay for the losses of a few.
actuary
risk manager
underwriter
insurance agent - underwriter
15. From the perspective of a __________, an insurable risk is one which is not reasonably
calculable.
risk manager
insurance company
underwriter
actuary - risk manager
16. On the retention/transfer diagram the total amount per claim or per occurrence is represented
by ______________________________________.
tolerance corridor
vertical axis
horizontal axis
external financing - vertical axis
17. Which of the following is not a governing document of a risk management program?
policy statement
policy and procedure manual
mission statement
code of conduct - code of conduct
18. Risk managers often use external service providers as part of their network. Which one of
these is not a reason to use an external network member?
Upper management request
Time is of the essence
An objective viewpoint is required
Internal expertise exists and is less costly - Internal expertise exists and is less costly
19. A situation, practice, or condition that may lead to an adverse financial consequence is a(n)
__________.
exposure
hazard
loss
ANSWERS RATED A+
1. Reinterpretation of a law causes your company to modify manufacturing procedures. Which
one of the general classes of risk does the example illustrate?
Juridical
Legal
Political
Economic - Legal
2. The losses incurred from a tree falling and blocking the entrance to a major retail store owned
by your company would fall under which logical classification of risk?
Net income
Liability
Property
Human resources - Net income
3. Martha is building her risk management team. She is looking for a team member who can help
her calculate development factors. This duty would be performed by which of the following team
members?
Accountant
Agent or broker
Actuary
RMIS provider - Actuary
4. The four logical classifications of exposures are used during the __________ step of the risk
management process.
Identification
Analysis
Administration
Control - Identification
5. Nicholas believes that the risk control program he has implemented will greatly reduce the
frequency and severity of losses at his company. He now wants to choose an insurance plan that
will be the most cost-effective, taking into consideration the lower frequency and severity of
losses, while maintaining some carrier services. Which plan would he choose?
Deductible Plan
Dividend Plan
Guaranteed Cost Plan
Self-Insurance - Deductible Plan
6. Which one of the following does not demonstrate a purpose of quantitative analysis?
Using loss data to determine what caused the "back strain" losses.
Using loss data to assist in forecasting next year's slip-and-fall losses.
,You use loss data to decide which risks should be transferred to the insurance company.
Using loss data to determine which improvement projects to fund. - Using loss data to determine
what caused the "back strain" losses.
7. The definition of ___________ is any conscious action or inaction to minimize, at the optimal
cost, the probability, frequency, severity, or unpredictability of loss.
Risk Administration
Risk Control
Risk Analysis
Risk Financing - Risk Control
8. You want to use a risk identification method that helps you examine values subject to loss and
fiscal impacts after a loss. Which method would you use?
Physical inspections
Loss data analysis
Experts
Financial statement analysis - Financial statement analysis
9. The benefits of this risk identification method include standardization, easy data classification
and tabulation, and because little training is required, utilization by non-risk management
personnel. Which risk identification method does this describe?
Flowchart review
Expert review
Insurance Policy Review
Checklists and surveys - Checklists and surveys
10. By reviewing loss reports to uncover why losses happened, you are:
determining the loss pick
determining the cost of risk
conducting a qualitative analysis
conducting a quantitative analysis - conducting a qualitative analysis
11. A company outsources the shipping of its product so that it no longer has a transportation
exposure. This illustrates which risk control technique?
Prevention
Transfer
Reduction
Avoidance - Transfer
12. A company stores its finished inventory in regional locations. This illustrates which risk
control technique?
Separation
Segregation
Duplication
Transfer - Separation
, 13. Lindsay's company has an insurance plan in which they may see some returned premium
based on their actual losses. Lindsay's company has a ___________.
Guaranteed Cost Plan
Deductible Plan
Self-Insurance Plan
Dividend Plan - Dividend Plan
14. From the perspective of a __________, an insurable risk is one which generates enough
premium paid by the many to pay for the losses of a few.
actuary
risk manager
underwriter
insurance agent - underwriter
15. From the perspective of a __________, an insurable risk is one which is not reasonably
calculable.
risk manager
insurance company
underwriter
actuary - risk manager
16. On the retention/transfer diagram the total amount per claim or per occurrence is represented
by ______________________________________.
tolerance corridor
vertical axis
horizontal axis
external financing - vertical axis
17. Which of the following is not a governing document of a risk management program?
policy statement
policy and procedure manual
mission statement
code of conduct - code of conduct
18. Risk managers often use external service providers as part of their network. Which one of
these is not a reason to use an external network member?
Upper management request
Time is of the essence
An objective viewpoint is required
Internal expertise exists and is less costly - Internal expertise exists and is less costly
19. A situation, practice, or condition that may lead to an adverse financial consequence is a(n)
__________.
exposure
hazard
loss
