CISR Risk Management QUESTIONS WITH ANSWERS RATED
A+
Qualitative analysis - the "what" analysis process, in other words, the identification and
evaluation of loss exposures that cannot be easily measured by traditional statistical or financial
methods.
Quantitative analysis - the "how much" analysis, which attempts to accurately measure risks by
using acceptable, traditional methodologies to calculate relative numeric values.
Loss Data Credibility - •Completeness - statistical analysis is valid if the data set is complete.
•Consistency - comparisons are valid if the same items (apples to apples) are used.
•Integrity - data with good integrity is reliable, accurate and current to the time period being
measured.
•Relevance - the data must yield information on matters of concern to the organization.
Benchmarking - a systematic way of continuously comparing an organization's performance
against others at a given time or against itself over a given time period.
Risk Control - Any conscious action or inaction to minimize, at the optimal cost, the probability,
frequency, severity, or unpredictability of loss
Risk Financing - The acquisition of internal and external funds to pay losses at the most
favorable cost.
Risk Financing Techniques - Risk Taking appetite, transfer options, simple transfer options &
loss sensitive transfer options
Risk Administration - the process of planning, implementing, and monitoring the risk
management program
Risk Management Information System - an information system that supports both the risk team
and the organization. This type of software deploys risk management tools in addition to
managing risk data. RMIS can sometimes serve as a customer relationship module, as well.
Four Components of the Total Cost of Risk - Insurance Costs, Retained losses & ALAE, Risk
Management departmental costs and Outside service fees
Pure Risk - A chance of loss or no loss, but no chance of gain.
Speculative Risk - Chance of loss or gain, usually associated with business or financial risk.
, Exposure - a situation, practice, or condition that may lead to an adverse financial consequence;
an activity or asset.
Hazard - a condition that may give rise to a loss from a given peril; physical, moral, or morale
characteristics that increases the likelihood of a loss.
Peril - the cause of loss, such as fire, wind, hail, slip and fall, etc.
Severity - the dollar amount of a given loss or the aggregate dollar amount of all losses for a
given period.
Accidents are also evaluated according to how severe the ensuing injury or property damage
may be.
Frequency - the number of losses occurring in a given time period. Accidents are evaluated
according to how often they might occur.
Incident - an event that disrupts normal activities and may become a loss (also referred to as a
near miss)
Accident - an unplanned event definite as to time and place that results in injury or damage to a
person or property
Occurrence - an accident with the limitation of time removed (an "accident" that is extended over
a period of time rather than a single observable happening)
Loss - a reduction in the value of assets. Not all losses become claims
Claim - a demand for payment or an obligation to pay as a result of a loss
Incurred but not reported (IBNR) - a reserve that must be established for claims that have already
occurred but that have not yet been reported
Which of the following is not one of the components in the definition of risk? - Chance or
probability of loss
Certainty concerning a loss
Possibility of a variation of outcomes from a given set of circumstances
Difference between expected losses and actual losses
Loss Trending - adjusting historical losses to account for inflationary trends so that the ultimate
value is more current or meaningful. Loss trend factors are multiplied by actual historical losses
to trend the losses
A+
Qualitative analysis - the "what" analysis process, in other words, the identification and
evaluation of loss exposures that cannot be easily measured by traditional statistical or financial
methods.
Quantitative analysis - the "how much" analysis, which attempts to accurately measure risks by
using acceptable, traditional methodologies to calculate relative numeric values.
Loss Data Credibility - •Completeness - statistical analysis is valid if the data set is complete.
•Consistency - comparisons are valid if the same items (apples to apples) are used.
•Integrity - data with good integrity is reliable, accurate and current to the time period being
measured.
•Relevance - the data must yield information on matters of concern to the organization.
Benchmarking - a systematic way of continuously comparing an organization's performance
against others at a given time or against itself over a given time period.
Risk Control - Any conscious action or inaction to minimize, at the optimal cost, the probability,
frequency, severity, or unpredictability of loss
Risk Financing - The acquisition of internal and external funds to pay losses at the most
favorable cost.
Risk Financing Techniques - Risk Taking appetite, transfer options, simple transfer options &
loss sensitive transfer options
Risk Administration - the process of planning, implementing, and monitoring the risk
management program
Risk Management Information System - an information system that supports both the risk team
and the organization. This type of software deploys risk management tools in addition to
managing risk data. RMIS can sometimes serve as a customer relationship module, as well.
Four Components of the Total Cost of Risk - Insurance Costs, Retained losses & ALAE, Risk
Management departmental costs and Outside service fees
Pure Risk - A chance of loss or no loss, but no chance of gain.
Speculative Risk - Chance of loss or gain, usually associated with business or financial risk.
, Exposure - a situation, practice, or condition that may lead to an adverse financial consequence;
an activity or asset.
Hazard - a condition that may give rise to a loss from a given peril; physical, moral, or morale
characteristics that increases the likelihood of a loss.
Peril - the cause of loss, such as fire, wind, hail, slip and fall, etc.
Severity - the dollar amount of a given loss or the aggregate dollar amount of all losses for a
given period.
Accidents are also evaluated according to how severe the ensuing injury or property damage
may be.
Frequency - the number of losses occurring in a given time period. Accidents are evaluated
according to how often they might occur.
Incident - an event that disrupts normal activities and may become a loss (also referred to as a
near miss)
Accident - an unplanned event definite as to time and place that results in injury or damage to a
person or property
Occurrence - an accident with the limitation of time removed (an "accident" that is extended over
a period of time rather than a single observable happening)
Loss - a reduction in the value of assets. Not all losses become claims
Claim - a demand for payment or an obligation to pay as a result of a loss
Incurred but not reported (IBNR) - a reserve that must be established for claims that have already
occurred but that have not yet been reported
Which of the following is not one of the components in the definition of risk? - Chance or
probability of loss
Certainty concerning a loss
Possibility of a variation of outcomes from a given set of circumstances
Difference between expected losses and actual losses
Loss Trending - adjusting historical losses to account for inflationary trends so that the ultimate
value is more current or meaningful. Loss trend factors are multiplied by actual historical losses
to trend the losses
