RMI 2302 Nyce Module 1 Exam Questions With Verified Answers

RMI 2302 Nyce Module 1 Exam Questions With Verified Answers What is Risk? - answerUncertainty Regarding Loss Danger does not equal what? - answerRisk Uncertainty - answerdoubt about our ability to predict future outcomes Sources of risk - answerPersonal Risks Property Risks Liability Risks Financial Risks Exposure - answerperson or property facing risk of loss Peril - answerthe immediate cause of loss Hazard - answercondition affecting the frequency or severity of loss Physical hazards - answerproperty conditions Intangible hazards - answerattitudes or culture Moral hazard - answerbehavioral changes Morale hazard - answerindifference Societal hazards - answerlegal or cultural Risk Neutral - answerindifferent toward risk Value of risky situation is expected loss Risk Averse - answer- Prefer to avoid risk Willing to pay more than expected loss to avoid risk MOST INDIVIDUALS Risk Seeker - answerprefer risk Would pay more than expected return to engage in risky situation Rules of Risk Management - answerDon't risk more than you can afford to lose Don't risk a lot for a little Consider the odds The Risk Management Process - answerDetermination of objectives Identification of risks Evaluation of risks Consideration of alternatives - selection of the tool Implementing the decision Evaluation and review Evaluation and Review - answerIn theory, the evaluation and review are the final step in the risk management process. Except in the rare case where an organization is newly created, every organization will have a risk management program already in existence. Determination of objectives - answerPost-Loss Objectives: Survival, Continuity of Operations, Earnings Stability, Continued Growth, Social Responsibility Identification of Risk - answerThere are a variety of tools available to assist in risk identification, including questionnaires, checklists, and procedure guides. The preferred approach to risk identification is a "combination approach," in which all of the tools available are brought to bear on the problem. Inspections - answerJust as one picture is worth a thousand words, one inspection tour may be worth a thousand checklists. An examination of the various operation sites of the firm and discussions with managers and workers will often bring attention to risks that might otherwise have been undetected. Evaluate the Risk - answerA. Loss Frequency (probability distributions) B. Loss Severity Maximum Possible Loss Probable Maximum Loss -Use of Statistics Central Tendency