Risks Flashcards
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What is risk management?
The process of identifying, assessing, and controlling threats to an organization’s capital and earnings.
True or False: Risk management only involves financial risks.
False
Fill in the blank: The four main types of risk are ______, ______, ______, and ______.
strategic, compliance, operational, financial
What is an example of a strategic risk?
Market competition or changes in consumer preferences.
Multiple Choice: Which of the following is NOT a type of risk? A) Compliance B) Operational C) Emotional D) Financial
C) Emotional
What is the purpose of insurance in risk management?
To transfer the financial burden of risk from an individual or organization to an insurance company.
True or False: All risks can be insured against.
False
What is the difference between pure risk and speculative risk?
Pure risk involves the possibility of loss or no loss, while speculative risk involves the possibility of loss, no loss, or gain.
Fill in the blank: The process of risk assessment includes ______, ______, and ______.
risk identification, risk analysis, risk evaluation
What is a risk appetite?
The amount of risk that an organization is willing to accept in pursuit of its objectives.
Multiple Choice: Which of the following is a method of risk control? A) Risk avoidance B) Risk acceptance C) Risk transfer D) All of the above
D) All of the above
What type of insurance covers damages to property caused by fire?
Property insurance
True or False: Life insurance is a type of liability insurance.
False
What does the term ‘deductible’ refer to in insurance?
The amount that the insured must pay out of pocket before the insurance coverage kicks in.
Fill in the blank: ______ risk is associated with the potential loss due to legal liabilities.
Liability
What is a risk management plan?
A document that outlines how risks will be managed, including strategies for mitigation and response.
Multiple Choice: Which of the following is a feature of general liability insurance? A) Covers employee injuries B) Covers property damage C) Covers professional errors D) Covers vehicle accidents
B) Covers property damage
What is the primary goal of enterprise risk management?
To create a framework for managing risks across an organization to achieve its objectives.
True or False: Risk retention is a strategy where an organization accepts the risk and its consequences.
True
What is a risk matrix?
A tool used to evaluate the probability and impact of risks to prioritize them.
Fill in the blank: ______ insurance protects against losses due to business interruptions.
Business interruption
What is the difference between occurrence and claims-made insurance policies?
Occurrence policies cover events that happen during the policy period, while claims-made policies cover claims made during the policy period.
Multiple Choice: What is the first step in the risk management process? A) Risk evaluation B) Risk identification C) Risk mitigation D) Risk transfer
B) Risk identification
What is a risk tolerance?
The degree of variability in investment returns that an individual is willing to withstand.
