IC86 Mock Test Sample 8
These questions focus on Enterprise Risk Management (ERM), risk financing, risk transfer, speculative risk, natural perils, and business risk management techniques. They explain how organizations manage risks through insurance, reinsurance, hedging, contingency planning, and mitigation strategies. Important concepts include protecting business reputation, safeguarding resources, identifying operational risks, and handling financial uncertainties. The questions also cover workplace safety measures, risk likelihood and severity analysis, commitments under COCA, and definitions of risk. Different approaches such as risk avoidance, reduction, transfer, and acceptance are highlighted to help understand practical risk management decisions that organizations use for stability, growth, and long-term sustainability.
1. Identify which of these is a Finite risk tool for mitigating risk?
a. Risk retention groups
b. Contingent debt
c. Income swaps
d. Loss portfolio transfers
2. Identify which of these is NOT an advantage of having an Enterprise Risk Management system within the organization?
a. Only 1
b. Only 2
c. Only 3
d. Both 1 and 2
3. Identify which of these are benefits of Risk Management to a company?
a. Only 1
b. Only 2
c. Only 1 and 2
d. Only 1 and 3
4. Identify which of these are examples of Risk Transfer under risk financing?
a. Only 3
b. Only 1 and 2
c. Only 2 and 3
d. Only 1 and 3
5. Identify which of these are Natural Perils?
a. Only 1
b. Only 2
c. Both 1 and 2
d. Both 1 and 3
6. Identify which of these are not an objective of enterprise risk management?
a. Only 1
b. Only 2
c. Both 2 and 3
d. Both 1 and 2
7. Identify which type of risk is this based on the statements given.
a. Social risk
b. Liability risk
c. Static Risk
d. Pure Risk
8. If a company has an ambition of high growth then the main objective of risk management programme will be to _______ .
a. Control the costs
b. Reduce the total exposure
c. Avoid risks
d. Protect expanding resources
9. If an individual leaves employment during full employment and fails to secure another job immediately, this is an example of _________ .
a. Speculative Risk
b. Physical Risk
c. Capital Risk
d. Dynamic Risk
10. If an insurance company enters into a re-insurance contract then this is an example of _______ .
a. Mitigation of risk
b. Sharing of risk
c. Avoidance of risk
d. Transfer of risk
11. If an organisation replaces a doubtful supplier with a reliable one, this is an example of ______ .
a. Risk transfer
b. Risk avoidance
c. Risk mitigation
d. Risk retention
12. If the records of an organisation's account receivable get destroyed, what difficulty can be faced?
a. Impossible to reconstruct the data
b. Reduction in the total receivables
c. Reduction in the net collections
d. Wastage of time
13. If the source of danger is extreme heat in a manufacturing unit, what protection should workers take?
a. Only 1
b. Only 2
c. Both 1 and 2
d. Both 2 and 3
14. If there is a high likelihood of occurrence of a risk and it also involves a high cost of damage, what should be the ideal course of action?
a. Only 2 and 3
b. Only 1 and 2
c. All 1, 2 and 3
d. Only 2
15. If there is low likelihood of risk occurrence and it involves a high cost of damage, what should be the ideal course of action?
a. Only I
b. Only II
c. Only III
d. I and III
16. Implementing the selected techniques involves technical and managerial decisions. Which decisions would enable precisely deciding what should be done?
a. Only 1
b. Only 2
c. Only 3
d. Both 1 and 3
17. In ____________ risks, the targets of the organisation remain unaffected.
a. Only I
b. Only II
c. Only III
d. I and II
18. In accordance with COCA, ________________ are intended to convey self-imposed duties.
a. Contracts
b. Decree
c. Commitments
d. Obligations
19. In accordance with COCA, which of the following are intended to convey self-imposed duties?
a. Agreements
b. Commitments
c. Obligations
d. Contracts
20. In accordance with the concise Oxford dictionary, risk is defined as _____ .
a. The degree of probability of loss
b. Exposure to mischance
c. Chance of loss or injury
d. The effect of uncertainty on objectives
