IC86 Mock Test Sample 9
Risk management and insurance concepts help organizations identify, analyze, control, and transfer risks effectively. Topics include COSO framework components, catastrophic risk management, business continuity planning, consequential loss analysis, and enterprise risk management. Risks may arise from natural disasters, operational failures, financial uncertainty, or social and market changes. Techniques such as risk avoidance, mitigation, transfer, retention, insurance, and contingency planning are widely used. Business continuity plans ensure smooth recovery after disruptions. Consequential loss analysis studies the impact on buildings, stock, and machinery. Insurance provides indemnification, reduces uncertainty, and supports loss reduction. Effective risk management improves stability, profitability, safety, and long-term organizational sustainability.
1. In accordance with the eight components of COSO framework, four categories of risk response include avoidance, acceptance, reduction and _______ .
a) Analysis
b) Sharing
c) Evaluation
d) Mitigation
2. In case an organisation suffers a loss, what will be the basic objective(s) of the management in such a case?
a) Only 1
b) Only 2
c) Only 3
d) Both 1 and 3
3. In Catastrophic Risk Management, the process of determining the impact on the firm of imagined extreme adverse situations is known as ______ .
a) Catastrophic Risk Transfer
b) Active Catastrophic Risk Management
c) Trend Analysis
d) Contingency Planning
4. In Consequential loss analysis (Manufacturing), property values at risk should be detailed for each block showing:
a) Only 1
b) Only 2
c) Only 3
d) Both 2 and 3
5. In his book "Risk, Uncertainty and Profit", Prof. Frank Knight termed unpredictable events as ________ .
a) Uncertainties
b) Holocaust
c) Dangers
d) Risks
6. In his book "Risk, Uncertainty and Profit", Prof. Frank Knight termed measurable events as ______ .
a) Dangers
b) Risks
c) Exposures
d) Uncertainties
7. In Mumbai, during monsoons, flooding can cause a loss. What type of risk is this?
a) Only 1
b) Only 2
c) Only 3
d) 1 and 2
8. Hold-harmless agreements demonstrate which method of dealing with risk?
a) Avoidance
b) Insurance Transfer
c) Non-Insurance transfer
d) Retention
9. In prioritising, which risks should be addressed first?
a) Major Risks
b) Minor Risks
c) Medium Risks
d) Moderate Risks
10. Identify the example(s) of retrospective finite risk reinsurance.
a) Only I
b) I and II
c) I and III
d) II and III
11. Identify the factors influencing continued operations of an organisation.
a) Only I
b) I, II and III
c) I and II
d) II and III
12. Identify the functions of a Business Continuity Plan (BCP).
a) Only II
b) I and II
c) I and III
d) II and III
13. Identify the tasks which come in the scope of a risk audit.
a) Only I
b) I, II and III
c) I and II
d) I and III
14. Identify the tasks which come under the scope of preparing a risk profile.
a) Only II
b) I and II
c) I and III
d) II and III
15. Identify in which ways revenues may get reduced as a result of accidental loss to property.
a) Only 2
b) Both 1 and 2
c) Both 2 and 3
d) Both 1 and 3
16. Identify the activities in a risk management programme related to risk control.
a) Only 2
b) Only 3
c) Both 1 and 2
d) Both 2 and 3
17. Identify the activities conducted at the risk analysis stage.
a) Only 1
b) Only 3
c) Both 1 and 2
d) Both 2 and 3
18. Identify the advantages of a written risk management policy statement.
a) Only 1
b) Only 2
c) Both 2 and 3
d) Both 1 and 3
19. Identify the advantages of insurance in handling risks.
a) 1 and 2
b) 2 and 3
c) 1, 2 and 3
d) 1, 2, 3 and 4
