Risk Management

Question 1

Risk Avoidance

Answer 1

Used in instances in which the exposure has catastrophic potential, and the risk cannot be reduced or transferred. (i.e. avoiding dangerous activities)

Question 2

Risk Reduction

Answer 2

Consists of all techniques that are designed to reduce the likelihood of loss. (i.e. security systems)

Question 3

Risk transfer

Answer 3

Shifting the financial consequences associated with the risk to a third party. (i.e. Life insurance)

Question 4

Risk Retention

Answer 4

Intentionally or unintentionally retaining the risk of loss from the exposure (i.e. Self-insuring)

Question 5

PAP part D

Answer 5

Damage to your auto
-Collision: damage caused by an accident, vehicle, light pole, building etc
-Comprehensive: all other physical damage to the auto. Animal, theft, glass, breakage, flood, fire.

Question 6

PAP part A

Answer 6

Liability
Single limit: one dollar cap
Split limit: max bodily injury/ max all bodily injury / max property damage