IC86 Mock Test sample 3
Risk management helps organisations prevent, minimise and control losses through systematic identification, analysis and treatment of risks. Different phases such as pre-event, during-event and post-event stages help businesses manage disasters effectively. Risk attitudes vary from risk averters to risk preferers depending on willingness to face uncertainty. Techniques like flow charts, threat analysis and checklists are used for identifying risks. Concepts such as self-insurance, non-insurance transfer and finite risk reinsurance support financial stability. Businesses also deal with chronic losses, personal risks and economic obsolescence. Effective risk management improves operational efficiency, reduces uncertainty and supports long-term organisational growth and continuity.
1. There are a number of ways by which loss may be prevented or minimised. Which of the below options is NOT a way?
- Eliminating the possibility of its occurrence
- Maximising the salvage
- Effecting rehabilitation as soon as possible after the occurrence
a) Only 1
b) Only 2
c) Only 3
d) Both 1 and 2
2. There are five steps in a Risk Management decision making process. Which is the fifth and the last step?
a) Identifying & Analyzing loss exposure
b) Examining the feasibility of alternative risk management techniques
c) Monitoring & improving the programme
d) Implementing the selected technique
3. There are five steps in a Risk Management decision making process. Which is the first step?
a) Selecting the best technique
b) Implementing the selected technique
c) Monitoring & improving the programme
d) Identifying & Analyzing loss exposure
4. There was a gas leak after working hours, which was repaired after some hours. Which phase of disaster is appropriate in this situation?
a) Recovery phase
b) Crisis phase
c) Restoration phase
d) Downtime phase
5. This person welcomes the existence of risk and uncertainty. He is willing to take chance of gain against the odds posed by risks. Under which category of risk attitude can this person be classified?
- Risk Averter
- Risk Neutral
- Risk Preferer
a) Only 1
b) Only 2
c) Only 3
d) Both 2 and 3
6. This risk management team of Morgan Ltd. wants to limit the effect of losses due to a fire in their godown by recovering the maximum salvage value of its inventory. Which phase of an event under a risk management programme is this?
a) Pre Event phase
b) Post Event phase
c) Reporting Phase
d) During Event Phase
7. To _____ means to forecast and plan, to organise, to command, to co-ordinate and to control.
a) Manage
b) Organise
c) Foresee
d) Plan
8. To _______ means building up this dual structure of the undertaking, both material and human.
a) Foresee and Plan
b) Manage
c) Delegate
d) Organise
9. To interpret the flow chart in terms of potential risks at different stages of the flow is the duty of ________.
a) The Managing Director
b) The Management
c) The Risk Manager
d) The Chief Auditor
10. Under ___________________ methods of risk identification, the risk assessment is done by preparing charts that represent the flow of various aspects of an organisation.
a) Physical inspection / survey
b) Hazards and operability (HAZOP) Study
c) Flow charts
d) Study and enquiry
11. Under the _________ method of risk identification, the risk assessment is done by compiling a list of threats to the business.
a) Check Lists
b) Flow Charts
c) Study and Enquiry
d) Threat analysis
12. Under which of the following risk attitude category is a person normally frightened by risk and does not like to live with uncertainty?
a) Risk Neutral
b) Risk Averter
c) Risk Challenger
d) Risk Preferer
13. Under which of the following risk attitude category is a person willing to take a chance of gain against all odds posed by risks?
- Risk Neutral
- Risk Averter
- Risk Preferer
a) Only 1
b) Only 2
c) Only 3
d) Both 1 and 3
14. Under which risk category does Risk of ill health, Risk of unemployment and Risk of early death fall?
a) Fundamental Risk
b) Static Risk
c) Pure Risk
d) Personal Risk
15. Voltek Ltd. volunteered to build a road in an industrial area and asked industrial units to sign a hold-harmless agreement. Which method of dealing with risk is this?
a) Non insurance transfer
b) Insurance transfer
c) Risk mitigation
d) Risk Avoidance
16. What are chronic losses?
a) Losses that may happen sometime and are medium sized and irregular
b) Losses that may be controlled to a significant extent
c) Losses which are very large and may occur on rare occasions
d) Losses which are small and regular, and almost inevitable
17. What are the main causes of economic obsolescence of property?
- Wear and tear due to aggressive use
- Change in fashion
- Improvement in technology
a) Only 3
b) Only 1 and 2
c) Only 1 and 3
d) Only 2 and 3
18. What does finite risk reinsurance products combine?
a) Risk financing and risk transfer
b) Risk transfer and risk mitigation
c) Risk financing and risk mitigation
d) Risk identifying and risk transfer
19. What does the process of risk management generate for a particular organisation, for a given community and for the entire economy?
- Benefits
- Costs
- Inflation
a) Only 1
b) Only 2
c) Only 3
d) Both 1 and 2
20. What is 'Personal Risk'?
a) Risk due to changes in human wants
b) Potential liability for any individual or institution
c) Potential loss to the property
d) Potential loss to the persons
