RISK MANAGEMENT ENTERPRISE RISK
EVALUATION MODULE EXAM QUESTIONS
SOLUTIONS DECISION MAKING AND
CONTROL SYSTEMS 2026
◉ Gain/loss type of risks
Answer: speculative (renovations)
◉ Risk
Answer: Uncertainty regarding negative outcome (loss)
=Loss*Probability
◉ Is there any risk when there's no uncertainty?
Answer: NO
◉ When there's no uncertainty what to do?
Answer: Loss mitigation (intercept, confess, hire lawyer)
◉ Loss
Answer: does not mean risk
,◉ If risk=(p)(loss)
Answer: than as probability increases, so should risk
◉ Pure risk
Answer: loss or no loss
ex. theft, accident, time of death but not death
◉ Speculative risk
Answer: loss or no loss or gain
ex. investing, lottery, plastic surgery
◉ Can you insure for pure risks?
Answer: yes
◉ Can you insure for speculative risks?
Answer: no. may take larger risks if loss is limited
◉ WTC loss
Answer: 40b split between (property, biz interruption, general
liability in thirds)
, ◉ Terrorism risk and insurance acts (TRIA)
Answer: Federal backstop for federal insurance claims related to
acts of terrorism
Government pays 85% of losses above 100M
◉ Risk Management
Answer: What to do to protect assets from risk (hide valuables,
insurance) ALSO a functional area of a firm that uses the risk mgmt
decision making process
◉ Exposures
Answer: Assets that could lost (life, car parts, contents)
◉ Perils
Answer: How things can be lost (collision, theft)
◉ Traditional Risk Management
Answer: Silo apporach to RM. Focuses on insurable risks. Risk
manager
◉ Static risk
Answer: Risk doesn't change over 10 years ex: natural disasters, fire,
death
EVALUATION MODULE EXAM QUESTIONS
SOLUTIONS DECISION MAKING AND
CONTROL SYSTEMS 2026
◉ Gain/loss type of risks
Answer: speculative (renovations)
◉ Risk
Answer: Uncertainty regarding negative outcome (loss)
=Loss*Probability
◉ Is there any risk when there's no uncertainty?
Answer: NO
◉ When there's no uncertainty what to do?
Answer: Loss mitigation (intercept, confess, hire lawyer)
◉ Loss
Answer: does not mean risk
,◉ If risk=(p)(loss)
Answer: than as probability increases, so should risk
◉ Pure risk
Answer: loss or no loss
ex. theft, accident, time of death but not death
◉ Speculative risk
Answer: loss or no loss or gain
ex. investing, lottery, plastic surgery
◉ Can you insure for pure risks?
Answer: yes
◉ Can you insure for speculative risks?
Answer: no. may take larger risks if loss is limited
◉ WTC loss
Answer: 40b split between (property, biz interruption, general
liability in thirds)
, ◉ Terrorism risk and insurance acts (TRIA)
Answer: Federal backstop for federal insurance claims related to
acts of terrorism
Government pays 85% of losses above 100M
◉ Risk Management
Answer: What to do to protect assets from risk (hide valuables,
insurance) ALSO a functional area of a firm that uses the risk mgmt
decision making process
◉ Exposures
Answer: Assets that could lost (life, car parts, contents)
◉ Perils
Answer: How things can be lost (collision, theft)
◉ Traditional Risk Management
Answer: Silo apporach to RM. Focuses on insurable risks. Risk
manager
◉ Static risk
Answer: Risk doesn't change over 10 years ex: natural disasters, fire,
death
