IC86 Mock Test sample 1
Risk management involves identifying, assessing, controlling and financing risks to minimize losses and ensure business continuity. Organisations use tools like inspections, flow charts and stress testing to identify and manage risks effectively. Different types of risks include liability, catastrophe, personal and fundamental risks. Businesses also use alternatives such as CAT bonds, securitization and captives for risk transfer and financing. Disaster management focuses on contingency planning, communication and active response strategies. Risk mitigation includes prioritizing actions, assigning responsibilities and implementing controls. Effective risk management programmes require clear objectives, structured controls and continuous updating of business continuity plans to address operational and environmental changes.
1. ______ can be seen as the opposite to insurance securitisation.
a) Spread Loss Covers
b) Capital Markets
c) Insuratization
d) ART
2. Identify the factor(s) which are taken into account while determining the total cost of risk.
- The cost of any risk control measures
- The cost of injury or damage
- The cost of handling and settling the loss
a) Only 1
b) Both 2 and 3
c) Both 1 and 2
d) All 1, 2 and 3
3. Techniques and approaches like Study and Enquiry, Physical inspections, Check lists, Flow Charts etc. are used for _______ of risks.
a) Identification
b) Solving
c) Evaluation
d) Assessment
4. Which of the following ambitions is an organisation's capability to generate net income?
a) Good Balance Sheet
b) Growth
c) Stability of earnings
d) Profitability
5. A business faces possibility that it will be held legally liable for property damage or personal injuries suffered by others. Identify the type of loss exposure.
a) Common Loss Exposure
b) Property Loss Exposure
c) Liability Loss Exposure
d) Personnel Loss Exposure
6. Identify which is NOT an example of Funded Traditional Contingent Capital tool.
a) Income / Asset swaps
b) Banking products
c) Contingent debt
d) Captives
7. The process of Risk Management involves:
- Preventing losses
- Minimising losses
- Paying for those losses which will inevitably occur
a) Only 1
b) Only 2
c) Both 1 and 2
d) All 1, 2 and 3
8. Which of these are the aftermaths of a disaster?
- The interruption period is quite long
- Property damage
- Substantial loss to life
a) Only 1 and 2
b) Only 2 and 3
c) Only 1 and 3
d) All 1, 2 and 3
9. CAT bonds, Credit securitization, Weather derivatives and Finite risk products are examples of _______.
a) Risk Retention Groups
b) Alternatives to insurance products
c) Insurance products
d) Both 1 and 3
10. In the risk triangle, the apex or tip indicates risks having the most devastating effect. These are called _______.
a) Organisational Risks
b) Catastrophe Risks
c) Minor Risks
d) Major Risks
11. Under which risk category do Risk of ill health, unemployment and early death fall?
a) Fundamental Risk
b) Static Risk
c) Pure Risk
d) Personal Risk
12. Which risks are associated with groups and arise due to political or economic changes?
a) Fundamental Risk
b) Pure Risk
c) Particular Risk
d) Static Risk
13. Identify the ways revenues may get reduced due to accidental loss to property.
- Reduction in receivables
- Loss of rent
- Interruption in operations
a) Only 2
b) Both 1 and 2
c) Both 2 and 3
d) All 1, 2 and 3
14. Protected cell companies and Rent-a-captives are examples of ________.
a) Finite Risk
b) Transferred Risk
c) Contingent Capital
d) Captives
15. When catastrophe strikes, a firm takes decisive timely action and communicates effectively with stakeholders and media. This process is known as ________.
a) Catastrophic Risk Transfer
b) Active Catastrophic Risk Management
c) Stress Testing
d) Extreme Contingency Planning
16. ________ activities are conducted at the Risk Treatment stage.
- Risk Elimination
- Risk Reduction
- Risk Transfer
a) Only 1 and 2
b) Only 2 and 3
c) Only 1 and 3
d) All 1, 2 and 3
17. Identify the process involving trend analysis, stress testing, contingency planning and catastrophic risk transfer to anticipate potential disasters.
a) Risk Management Culture
b) Strategic Risk Management
c) Catastrophic Risk Management
d) Risk Control
18. Arrange the Risk Mitigation Activities in correct sequence.
- Select Control
- Prioritise Actions
- Assign Responsibility
- Develop Implementation Plan
a) 4, 3, 1, 2
b) 2, 1, 3, 4
c) 3, 2, 4, 1
d) 2, 3, 4, 1
19. Which of the following is NOT an element of an effective risk management programme?
a) Eliminating Risks
b) Controlling Programme
c) Setting Objectives
d) Defining responsibilities of the risk manager
20. As per international standards, which situations require updating a business continuity management plan?
- Change in contractors and suppliers
- Change in location
- Change in resources
a) Only 3
b) Both 1 and 2
c) Both 2 and 3
d) All 1, 2 and 3
