1. Fill in the blank with correct option: The risks that are to be identified are _________ that have a financial cost to them.
a. Pure risk
b. Static risk
c. Social risk
d. Speculative risk
2. Fill in the blanks with correct option: Risk avoidance is the best risk management technique when the chance of loss is ________ and the loss severity is _________.
a. Low, low
b. High, low
c. Certain, low
d. Low, high
3. Fill in the blanks with correct option: “Emergency, disaster and catastrophe – all these terms are __________ frequency ______ severity risks.”
a. High; High
b. High; Low
c. Low; High
d. Low; Low
4. Fill in the blanks with correct option: The ___________ of occurrence or the chance that an event may take place is defined as the number of occasions a particular event will occur in an infinitely large number of independent events.
a. Risk
b. Median
c. Probability
d. Uncertainty
5. Fill in the blanks: “Finite risk reinsurance aims at substantial pre-funding and post-funding of losses over a ______ contract period by the ceding company.”
a. Only I
b. Only II
c. Only III
d. I and II
6. Financial impact of any net income loss increases under which of the following circumstances?
a. Only 1
b. Only 2 and 3
c. Only 3
d. Only 1 and 3
7. Finite Risk Insurance addresses a broad range of goals like:
a. Only 1 and 2
b. Only 2 and 3
c. All 1, 2 and 3
d. Only 3
8. Finite risk insurance products are mostly useful where the risk sought to be insured against is a ______.
a. High severity and low frequency event
b. Low severity event
c. High frequency event
d. Low severity and low frequency event
9. Following are the strategies to manage risk:
a. II and III
b. I, II and III
c. Only II
d. I and II
10. For property loss exposure the property is divided into two types i.e. Real and Personal property. Which of these is NOT an example of Personal Property?
a. Finished Goods
b. Money
c. Supplies
d. Aircraft
11. For what purpose is the Inflation Index used in assessment of risk?
a. Only 1
b. Only 2
c. Only 3
d. Only 2 and 3
12. From the following phases, the post loss objectives of a risk management programme apply to which of them?
a. Only 1
b. Only 2
c. Both 1 and 2
d. Both 2 and 3
13. From the following, ___________________ can be the cause of personnel loss.
a. Only II
b. I and II
c. II and III
d. I and III
14. Future Engineers Ltd. bought insurance for its machinery with a 10% deductible. Which type of two risk management techniques did the management use?
a. Risk mitigation and Risk retention
b. Risk mitigation and Risk transfer
c. Risk avoidance and Risk retention
d. Risk transfer and Risk retention
15. Heavy floods in monsoon causes losses. This is an example of which type of risk?
a. Only 2
b. Only 3
c. Only 1
d. Both 1 and 3
16. How can Risk Management contribute directly to business profits?
a. By increasing stock levels
b. By reducing stock levels
c. By retaining cash flows
d. By reducing fluctuations in annual profits and cash flows
17. How can the ERM team determine the accurate cost of the company's risk exposure?
a. By understanding individual unit risk and assessing the individual risks in aggregate
b. By understanding overall organisational risk
c. By understanding total risk and assessing the individual risks in aggregate
d. By assessing division-wise risk
18. How is the “Net Contribution to the company” calculated using the following parameters?
a. 3 + (1 - 4)
b. 2 - 3
c. 3 - (1 + 4)
d. 3 - (2 - 4)
19. How is the probability of occurrence measured?
a. Only as a whole number
b. Only as a decimal
c. Only as a fraction
d. As a decimal or fraction or as a percentage
20. How is the valuation done as per the Reproduction Method?
a. As per the value of property depending upon present income value
b. As per demand and supply in the market
c. As per the cost of reproducing or replacing the property exactly at current prices
d. As per the cost of reproducing or replacing the property exactly at old prices
