IC86 Mock Test Sample 14
Risk management helps organizations reduce waste of resources, lower the cost of risk, and minimize adverse effects from losses. Risks may be speculative, pure, dynamic, or static depending on their nature and outcomes. Environmental disasters such as hurricanes and tornadoes can cause severe property and operational damage. HAZOP studies focus on identifying deviations, causes, and operational hazards. Losses are classified as chronic, sporadic, or catastrophic based on frequency and severity. Finite risk insurance products are useful for high-severity, low-frequency events and often involve long-term arrangements. Enterprise Risk Management (ERM) focuses on continuity, growth, and effective control of organizational exposures and uncertainties.
1. Identify from the following the benefits of risk management.
a. Only II
b. I and II
c. I and III
d. II and III
2. Identify from the following the definition of Speculative risk.
a. Speculative risk is where there is a chance of gain as well as loss
b. Speculative risk is where there is existence of a chance of loss only
c. Speculative risk is connected with losses caused by nature or human mistakes
d. Speculative risk is associated with changes in human wants and technological innovations
3. Identify from the following the INCORRECT statement/s about self-insurance.
a. Only I
b. Only II
c. Only III
d. I and III
4. Identify from the following, example/s of environmental disaster.
a. Only II
b. I and II
c. I and III
d. II and III
5. Identify from the following, the activities which are conducted at the risk analysis stage.
a. Only II
b. I and II
c. I and III
d. II and III
6. Identify from the following, the aftermaths of a disaster.
a. Only II
b. I and II
c. II and III
d. I and III
7. Identify from the following, the categories of losses that are often looked upon as a trade risk.
a. I and II
b. Only I
c. Only II
d. Only III
8. Identify from the following, the concerns of the HAZOP Study.
a. Only I
b. Only II
c. Only III
d. II and III
9. Identify from the following, the correct statement/s with regards to finite risk insurance products.
a. Only III
b. I and III
c. II and III
d. I and II
10. Identify from the following, the definition of risk given by American Risk Insurance Management Association.
a. Future uncertainty as regards financial loss
b. Chance of mishappening
c. Variation in the outcome over a specified period
d. The effect of uncertainty on objectives
11. ________ losses are medium sized and irregular that may happen sometime and may be able to be controlled to a significant extent.
a. Only 2
b. Only 1
c. Both 1 and 2
d. Both 2 and 3
12. _________ are any condition due to which there is a possibility of financial loss to an individual or family by causes like disability, death, sickness or unemployment.
a. Net income loss exposures
b. Personnel loss exposures
c. Personal loss exposures
d. Property loss exposures
13. _________ are small and regular losses and which are almost inevitable.
a. Only 1
b. Only 3
c. Only 2
d. Both 1 and 2
14. _________ losses are small and regular and which are almost inevitable.
a. Speculative
b. Chronic
c. Sporadic
d. Catastrophes
15. _________ risk does not affect a business organisation.
a. Political
b. Economic
c. Financial
d. Emotional
16. ____________ involves the transfer of assets subject to credit risk, such as receivables, to a specially created investment vehicle.
a. Captive Insurance
b. Insurance Pool
c. Credit Securitization
d. Self-insurance
17. _____________ risk is connected with losses caused by the irregular action of the forces of nature or mistakes and misdeeds of human beings.
a. Static
b. Pure
c. Dynamic
d. Speculative
18. _______________ is an example of unfunded method for mitigation risk.
a. Loss portfolio transfers
b. Self-insurance and reserves
c. Internal funds
d. Rent-a-captives
19. __________________ is not an objective of an enterprise risk management.
a. Only I
b. Only II
c. Only III
d. I and II
20. _____________________ is NOT an example of an economic peril.
a. Terrorism
b. Consequences of riots
c. Currency fluctuation
d. Technological advances
