Chapter 23 - Risk Manangement Flashcards
20 Questions
Of the following risk management strategies, the one that aims at minimizing both the severity and the likelihood of loss is
a. avoidance.
b. reduction.
c. transference.
d. retention.
b. reduction.
Insurance is a method of
a. risk elimination.
b. risk mitigation.
c. risk outsourcing.
d. risk acceptance.
c. risk outsourcing.
How does disclosure manage risk?
a. It deflects and reduces risk by preventing others from claiming they were misled.
b. It eliminates the risk of committing an error.
c. It accepts the risk of revealing confidential information.
d. It transfers the risk of a code violation to the client.
a. It deflects and reduces risk by preventing others from claiming they were misled.
Which of the following statements about a company procedures manual as a risk management device is true?
a. It places all the responsibility for compliance on the broker.
b. It relieves the licensee of responsibility for knowing and obeying the law.
c. It can be a guide to compliance with the law.
d. It adds to the risk of misleading the public.
c. It can be a guide to compliance with the law.
In what sense is the use of standardized forms a risk management procedure?
a. It eliminates the risk of being unable to draft a contract correctly.
b. It reduces the risk of losing a client by having to make a referral to an attorney.
c. It reduces the risk of committing an unauthorized practice of law.
d. It eliminates the risk of wasting valuable time in creating custom forms.
c. It reduces the risk of committing an unauthorized practice of law.
Keeping thorough records of every transaction is not only a risk management technique, it is
a. good for company morale.
b. necessary for obtaining market share.
c. a technique for discovering market trends.
d. a legal requirement.
d. a legal requirement.
Which of the following communication records must (as opposed to should) be kept?
a. Notes on every conversation.
b. Copies of required communications to principals.
c. Notes from company training sessions.
d. Business cards of licensees one meets at open houses.
b. Copies of required communications to principals.
The standard E & O policy covers damages resulting from
a. failure to disclose an environmental condition.
b. antitrust violations.
c. mishandling of earnest money deposits.
d. negligence, error or omission in carrying out professional services.
d. negligence, error or omission in carrying out professional services.
Which of the following is a common risk relating to the agency relationship?
a. Failing to inform and disclose properly.
b. Failing to take a personal interest in a transaction.
c. Acting as an exclusive agent without an oral agency agreement.
d. Forgetting to record the listing agreement.
a. Failing to inform and disclose properly.
Even after giving buyer and seller the required information about property condition disclosures, the licensee may still be subject to legal action for
a. failing to detect customer misrepresentations.
b. failing to disclose known adverse facts.
c. relying on publicly available market information.
d. advising the purchaser to exercise due diligence.
b. failing to disclose known adverse facts.
In performing a comparative market analysis, a licensee must be careful to
a. use the term “market value” whenever possible in the report.
b. show a low suggested selling price to avoid a complaint of misrepresenting the value.
c. include the results of a certified appraisal in the analysis.
d. avoid creating a false impression that the licensee is a certified appraiser.
d. avoid creating a false impression that the licensee is a certified appraiser.
In fulfilling a listing agreement, one of the major risk areas is
a. finding a buyer who turns out to be unqualified.
b. exceeding the authority of the agreement.
c. showing the property without the presence of the owner.
d. cooperating with other licensees.
b. exceeding the authority of the agreement.
A simple way of reducing the risk of committing an error or omission in the contracting process is
a. use a checklist of all items, contingencies, dates and responsibilities that must be met.
b. delegate some of your responsibilities to the licensee who represents the other party in the contract.
c. call the buyer and seller daily to check on progress.
d. cut the list of necessary tasks down to a few essentials and concentrate on tracking those.
a. use a checklist of all items, contingencies, dates and responsibilities that must be met.
Regarding contracts and forms,
a. once written and signed they cannot be changed except by a lawyer.
b. real estate licensees may alter forms but not contracts.
c. whoever originates them can make changes without the risk of unauthorized practice of law.
d. the principals may make changes as long as they sign or initial each change.
d. the principals may make changes as long as they sign or initial each change.
The best way to minimize the risk of violating fair housing laws is to
a. deal only with consumers who do not belong to a protected class.
b. obtain education in the content and intent of the laws.
c. make sure there is always a witness present at all meetings with consumers.
d. stay away from transactions involving public housing.
b. obtain education in the content and intent of the laws.
