CISR RISK MANAGEME NT EXAM 2023 -2024 ACTUAL EXAM 20 0 QUESTIOS AND CORECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) |AGRADE Risk Financing - ....ANSWER... The acquisition of internal and external funds to pay losses at the most favorable cost. Risk Financing Techniques - ....ANSWER... Risk Taking appetite, transfer options, simple transfer options & loss sensitive transfer options Risk Administration - ....ANSWER... the process of planning, implementing, and monitoring the risk management program Risk Management Information System - ....ANSWER... an information system that supports both the risk team and the organization. This type of software deploys risk management tools in addition to managing risk data. RMIS can sometimes serve as a customer relationship module, as well. Four Components of the Total Cost of Risk - ....ANSWER... Insurance Costs, Retained losses & ALAE, Risk Management departmental costs and Outside service fees Pure Risk - ....ANSWER... A chance of loss or no loss, but no chance of gain. Speculative Risk - ....ANSWER... Chance of loss or gain, usually associated with business or financial risk. Exposure - ....ANSWER... a situation, practice, or condition that may lead to an adverse financial consequence; an activity or asset. Hazard - ....ANSWER... a condition that may give rise to a loss from a given peril; physical, moral, or morale characteristics that increases the likelihood of a loss. Peril - ....ANSWER ...the cause of loss, such as fire, wind, hail, slip and fall, etc. Severity - ....ANSWER... the dollar amount of a given los s or the aggregate dollar amount of all losses for a given period. Accidents are also evaluated according to how severe the ensuing injury or property damage may be. Frequency - ....ANSWER... the number of losses occurring in a given time period. Accidents are evaluated according to how often they might occur. Incident - ....ANSWER... an event that disrupts normal activities and may become a loss (also referred to as a near miss) Accident - ....ANSWER... an unplanned event definite as to time and place that results in injury or damage to a person or property Occurrence - ....ANSWER... an accident with the limitation of time removed (an "accident" that is extended over a period of time rather than a single observable happening) Loss - ....ANSWER ...a reduction in the value of assets. Not all losses become claims Claim - ....ANSWER... a demand for payment or an obligation to pay as a result of a loss Incurred but not repor ted (IBNR) - ....ANSWER... a reserve that must be established for claims that have already occurred but that have not yet been reported Which of the following is not one of the components in the definition of risk? - ....ANSWER... Chance or probability of l oss Certainty concerning a loss Possibility of a variation of outcomes from a given set of circumstances Difference between expected losses and actual losses Loss Trending - ....ANSWER... adjusting historical losses to account for inflationary trends so that the ultimate value is more current or meaningful. Loss trend factors are multiplied by actual historical losses to trend the losses Loss Development - ....ANSWER... the difference between the value of a loss as originally reported and its subse quent evaluation at a later date or at the time of its final disposition Expected Losses - ....ANSWER... Loss projections ("loss pics" or "loss picks") based on probability distributions and statistics, frequently developed using actuarial techniques including trending and development. Avoidance - ....ANSWER... eliminating an activity or exposure which eliminates chance of loss Prevention - ....ANSWER... breaks sequence of events that leads to a loss or that makes the event less likely Reduction - ....ANSWER... reducing the severity or financial impact from unpreventable losses Segregation/Separation/Duplication - ....ANSWER... working primarily to reduce the severity of the loss Transfer (Contractual, Physical or Both) - ....ANSWER... having another party be financially responsible for all or a partial amount of the loss Active Retention - ....ANSWER... planned financial responsibility for the loss. The organization knows in advance that it will be financially responsible should a loss oc cur Passive Retention - ....ANSWER... not planned. It is an organization's unplanned financial responsibility for the loss. Passive retention can be the result of failure of the risk manager or insurance professional to identify the exposure, failure to ac t or forgetting to act. Retention Level - ....ANSWER... the amount of loss that is self -insured. It is usually expressed on a per occurrence basis. It is sometimes referred to as the self -insured retention Frequency - ....ANSWER... A control technique that is designed to prevent a certain type of accident would have the goal of reducing Economic - ....ANSWER ...the risk arising out of an organization's operational, marketplace, financial or entrepreneurial activities Legal - ....ANSWER... the risks inherent in compliance or arising from statutory liability Political - ....ANSWER... the risk associated with legal changes by the governmental interpretations (or reinterpretations) of rules and regulations Social - ....ANSWER... the risks arising from public rel ations, loss of reputation, image or cultural problems Physical - ....ANSWER... risks arising from property, persons, or information Juridicial - ....ANSWER... risks arising from the decision of a judge or jury, or from court or jury attitudes Statutory Liability - ....ANSWER ...holds that a person or company can be held responsible for a certain action or omission because of a related law that is not open to interpretation.
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