AS-05 (v) Actuarial Aspects of Risk Management Mock Test 20
This section explains key principles of risk management, risk modelling, business environment, and capital economics. It discusses different risk treatment approaches, including risk avoidance, reduction, and transfer, while emphasizing that risk assessment begins and ends with clearly defined objectives. The chapter explores demographic factors influencing the business environment, introduces the learning objectives of risk modelling, and explains the role of discount rates in business valuation. It also covers claim reserving principles, the concept of capital in an economy, business decision-making, and the use of sensitivity analysis to identify the variables that have the greatest impact on project and enterprise risk.
1. Transferring a risk to others through contract or insurance is one way risk may be stated. Which other state involves taking appropriate steps to avoid the risk?
A. Reduced
B. Absorbed
C. Ignored
D. Avoided
E. Transferred
2. According to Key Principle 2, risk assessment begins and ends with:
A. Employee reviews
B. Marketing plans
C. Specific objectives
D. Customer feedback
E. Financial statements
3. The size, density, distribution and growth rate of population are part of which environment?
A. Economic Environment
B. Natural Environment
C. Social Environment
D. Demographic Environment
E. Legal Environment
4. What are the two learning objectives of Chapter 9 on Risk Modelling?
A. Introduction to Risk Modelling and Detailed discussion on Risk Modelling
B. Risk Measures and Risk Classification
C. Scenario Testing and Sensitivity
D. Reserving and Valuation
E. Qualitative and Quantitative Analysis
5. In a best-case scenario for valuing a firm, the discount rate would be set at its:
A. Highest level
B. Lowest level
C. Average level
D. Market level
E. Median level
6. Reducing a risk by an alternative approach is described in the chapter as which risk state?
A. Transferred
B. Unrecognized
C. Absorbed
D. Reduced
E. Avoided
7. Under the 'Costs' rule, a claim handler must reserve not only the amount to be paid but also:
A. Share capital
B. Premiums earned
C. Any costs or expenses incurred while investigating the claim
D. Dividends
E. Tax liabilities
8. In the Economics of Capital, the economy has a total capital equal to what?
A. The office area
B. The number of products
C. The total marketing spend
D. The sum of all capital goods (assets)
E. The number of workers
9. Which of the following is shown at the centre of the business environment diagram in the chapter?
A. Profit
B. Government
C. Shareholders
D. Customers
E. Business Decisions
10. Sensitivity analysis can be used to determine:
A. The project budget
B. The team size
C. The schedule
D. Which variables have the greatest influence on the risk
E. The exact probability of every risk
