IC86 Mock Test Sample 15
Risk management helps organizations identify, analyze, and control risks that may affect business operations, assets, employees, and profitability. It includes techniques such as risk transfer, risk reduction, risk avoidance, and risk retention. Enterprise Risk Management (ERM) supports growth, stability, and shareholder value by managing uncertainties effectively. Alternative risk financing methods like finite risk insurance, securitization, and catastrophe bonds help organizations handle high-severity losses. Businesses use tools such as HAZOP studies, flow charts, physical inspections, and risk audits to identify exposures. Disaster management, emergency planning, insurance, and business continuity planning are also important components that reduce financial loss and improve organizational resilience.
Q1. “An accident may cause loss to an individual” is an example of:
a. Liability Risk
b. Personal Risk
c. Property Risk
d. Social Risk
Q2. A person who is frightened by risk and dislikes uncertainty is called:
a. Risk Neutral
b. Risk Preferer
c. Risk Averter
d. Risk Seeker
Q3. A person who reacts to risk according to statistical probability is called:
a. Risk Averter
b. Risk Neutral
c. Risk Preferer
d. Risk Controller
Q4. A business facing legal liability for injuries or property damage to others is an example of:
a. Property Loss Exposure
b. Personnel Loss Exposure
c. Liability Loss Exposure
d. Net Income Loss Exposure
Q5. If a risk has high probability and high severity, the ideal action is:
a. Reduce the risk
b. Shift the risk
c. Avoid the risk
d. Accept the risk
Q6. Buying machinery insurance with a deductible is an example of:
a. Risk Avoidance and Risk Mitigation
b. Risk Transfer and Risk Retention
c. Risk Transfer and Risk Avoidance
d. Risk Mitigation and Risk Avoidance
Q7. Replacing inflammable liquid with non-flammable liquid is an example of:
a. Risk Avoidance
b. Risk Transfer
c. Risk Reduction
d. Damage Reduction
Q8. Overstating damage to claim higher insurance compensation is an example of:
a. Hedging
b. Adverse Selection
c. Moral Hazard
d. Risk Aversion
Q9. Possibility of an automobile accident is an example of:
a. Dynamic Risk
b. Speculative Risk
c. Pure Risk
d. Fundamental Risk
Q10. A checklist or questionnaire used instead of site visit may have which limitation?
a. Easy to change
b. Delayed feedback
c. High accuracy
d. Detailed observation
Q11. A risk should be avoided when:
a. It is insurable
b. It has low impact
c. It has very high probability and impact
d. It can be retained
Q12. Loss due to resignation or death of key employees is called:
a. Property Loss Exposure
b. Personnel Loss Exposure
c. Liability Exposure
d. Income Exposure
Q13. Mandatory driver safety training for taxi drivers is an example of:
a. Risk Transfer
b. Risk Retention
c. Risk Control
d. Risk Avoidance
Q14. Reducing costs and attracting tourists to manage business uncertainty is an example of:
a. Acceptance
b. Reduction
c. Avoidance
d. Sharing
Q15. Learning from a serious problem situation after it occurs is called:
a. Stress Testing
b. Trend Analysis
c. Problem Post Mortem
d. Contingency Planning
Q16. Alternative Risk Financing products are divided into:
a. Alternatives to insurance companies and insurance products
b. Alternatives to brokers and reinsurers
c. Alternatives to custodians and agents
d. Alternatives to insurers and auditors
Q17. Alternative risk transfer concepts are differentiated by:
a. Goal
b. Product structure
c. Risk type
d. Cost only
Q18. Alternative risk transfer and financing techniques include:
a. Finite Risk Reinsurance
b. Insurance securitization
c. Insurance derivatives
d. All of the above
Q19. Insurance securitization and insurance derivatives belong to:
a. Traditional Insurance
b. Alternative Risk Financing
c. Risk Avoidance
d. Risk Elimination
Q20. Finite Risk Reinsurance is mainly useful for:
a. High-frequency low-severity risks
b. High-severity low-frequency risks
c. Daily operational risks
d. Small unavoidable losses
