Chapter 1

Question 1

Define insurance

Answer 1

A contract in which one party, the insurer, for monetary consideration agrees to reimburse another, the insured, for loss or liability for a loss on a define subject caused by specified hazards or perils

Question 2

Define risk

Answer 2

The chance of loss. Specifically the possible loss or destruction of property or the possible incurring of a liability.

Question 3

Define speculative risk

Answer 3

Possibility of either financial loss or financial gain exists

Question 4

Define pure risk

Answer 4

A situation involving a chance of a loss or no loss, but no chance of gain

Question 5

Out of speculative and pure risk, which one is insurable?

Answer 5

Pure risk

Question 6

What are the three types of insurable risks?

Answer 6

Personal risks
Property risks
Liability risks

Question 7

Explain personal risks

Answer 7

Personal risks encompass the chance of loss arising from a persons own bodily injury, loss of life or loss of income because of any of the following:

Death
Physical disability
Old age
Unemployment

Question 8

Explain property risks

Answer 8

Property risks encompass the chance of loss arising from the destruction of or damage to property

Question 9

Explain the difference between direct losses and indirect losses

Answer 9

Direct losses are those involving damage or destruction of the property insured

Indirect losses occur because of direct losses

Question 10

Explain liability risks

Answer 10

Liability risks, encompass the chance of loss arising from an individuals obligation to pay damages because of the injury or death of another or damage to another’s property.

Question 11

What are the three different classes of insurance?

Answer 11

Personal lines
Commercial lines
Special risks

Question 12

Define cyber risk

Answer 12

Any risk of financial loss, disruption of business, or damage to an organizations reputation due to a failure of its information technology systems

Question 13

What are the three general categories for cyber risk?

Answer 13

Delivered and unauthorized breaches
Unintentional or accidental security breaches
Operational IT risks

Question 14

What are the three main reasons threat actors might target a company?

Answer 14

1. corporate espionage
2. To steal private data
3. To steal money

Question 15

Explain first party exposures

Answer 15

First party exposures are those that affect the company directly

Question 16

What are the first party exposures associated with cyber incidents? (Expenses)

Answer 16

Event expenses
Extortion expenses
Restoration expenses
Regulatory expenses
Business interruption

Question 17

What are some of the expenses companies incur under the category event expenses?

Answer 17

Breach coach
Forensic investigator
Notification cost
Crisis management cost
Extra expenses

Question 18

Explain extortion expenses

Answer 18

Arise in cases of ransomware

Question 19

Explain restoration expenses

Answer 19

Data that are stolen or corrupted often need to be re-created. Restoration expenses are the cost of restoring the network and data to the point they were before the event occurred

Question 20

Explain regulatory expenses

Answer 20

Are the cost of retaining counsel to appear with company representatives and to help them prepare for regulatory proceeding

Question 21

Explain third-party exposures

Answer 21

The third-party information that companies collect. Such as contact information, birthdates, and credit card information.

Question 22

What are some areas that fall under third-party expenses?

Answer 22

Privacy breach
Internet media liability
Network security liability
Technology errors and omissions liability

Question 23

Define privacy breach

Answer 23

The unauthorized collection, disclosure, use, access, destruction, or modification of personal information

Question 24

What typical exposures fall under Internet media liability?

Answer 24

Libel, slander, and defamation
Intellectual property rights infringement
Invasion of privacy rights

Question 25

Explain network security liability

Answer 25

Losses occur due to the unauthorized access to, degration of, or disruption to a network perhaps through malware, a denial of service attack or a phishing scheme. This not only affects the company itself, but often it can also affect others (such as customers)

Question 26

Why is cyber risk an increasing threat for Canadian consumers and businesses?

Answer 26

Canadian spend more time online
Canadians are unsure how to protect themselves from cyber risk
Businesses increasingly need technology to function
Attacks target small to medium-sized enterprises
Legislative changes require mandatory data breach notifications