RMIN 5950- Chapter 1: Introduction to Risk Que And ANS Graded A+!!!

Which of the following would be an example of a pure risk? - ANS a. The risk from opening a small business b. The risk of fire damage to a restaurant (Correct Answer) c. The risk of a change in tax rates d. All of the above Cyber attack risk would be best classified as a - ANS a. pure static risk b. pure dynamic risk (Correct Answer) c. speculative static risk d. speculative dynamic risk Joe looks at a particular situation and considers it to be high risk. Sarah looks at the exact same situation and considers it low risk. Their difference of opinion illustrates the concept of (blank) risk. - ANS subjective Gail knows that the expected loss for a particular risk she faces is $1,000. If she is willing to $1,200 to buy insurance that fully protects her from that risk, we know that Gail is risk (blank) - ANS averse Match the type of risk with the example illustrating that risk. - ANS Liability risk- A company getting sued for discrimination Property risk- A warehouse being destroyed by a tornado Financial risk- A rise in borrowing costs Loss of income risk- A person becoming unemployed In decimal terms, what is the probability of getting a number greater than 3 when rolling a die? - ANS 0.5 The formula used to calculate the degree of objective risk is - ANS a. probable variation of actual from expected losses divided by the expected loss (Correct Answer) b. expected loss multiplied by the quantity 1 minus variance divided by expected loss c. range of reasonable loss expectation divided by actual loss experience d. expected losses minus probable losses divided by the range of actual losses experienced. Match the terms with the corresponding examples. - ANS Peril- Collision Physical hazard- Malfunctioning traffic light Moral hazard- Burning down your own building to collect insurance money Morale hazard- Not using a phone case because you know that you have insurance to cover your phone if it breaks The approach to risk management which reflects the intent to manage all forms of risk, regardless of type, is called (blank) risk management. - ANS enterprise (Correct Answer) integrated (Correct Answer) Put the steps of the risk management process in the proper order - ANS 1. Identify risks 2. Evaluate risks 3. Select risk management techniques 4. Implement and review decisions