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CPCU 500 /149 Questions And Answers
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CPCU 500 /149 Questions And AnswersQuiz :For public entities such as cities, counties and public utilities, which one
of the following is normally the most important post-loss risk management
goal?
Choose one answer.
A. Growth
B. Profitability
C. Continuity of operations
D. Earnings stability - Answer :C. Continuity of operations
Quiz :Which one of the following is the goal of enterprise-wide risk
management (ERM)?
Choose one answer.
A. Coordinate loss reduction efforts
B. Reduce risk management costs
C. Decentralize control of business decisions
D. Maximize the organization's value - Answer :D. Maximize the organization's
value
Quiz :A risk management program must be monitored and periodically
revised, and that revision involves four steps. Which one of the following is one
of those four steps?
Choose one answer.
A. Establish results-based rather than activity-based standards of acceptable
performance.
B. Compare actual results with the established performance standards.
C. Reduce any performance standards that have not been achieved by the
actual results.
D. Return to the first step in the risk management proc - Answer :B. Compare
actual results with the established performance standards.
Quiz :Risk can be classified as subjective or objective. Which one of the
following statements is correct with respect to these risk classifications?
Choose one answer.
A. Subjective risk is risk associated with individuals; objective risk is risk
associated with objects or things.
B. Risk managers focus on objective risk and attempt to avoid allowing
subjective risk to affect their decisions.
C. Subjective risk can exist even where objective risk does not.
,D. Individuals' subjective per - Answer :C. Subjective risk can exist even where
objective risk does not.
Quiz :JNL Construction is a general contractor. As the risk management
professional for JNL, Marie should be aware of the company's contractual
obligations, as well as the contractual obligations that others owe JNL. This
knowledge is necessary for Marie to meet which one of the following pre-loss
risk management goals?
Choose one answer.
A. Legality
B. Social responsibility
C. Tolerable uncertainty
D. Continuity of operations - Answer :A. Legality
Quiz :Residual uncertainty is the level of risk that remains after organizations
implement their risk management plans. Which one of the following
statements is correct with respect to residual uncertainty?
Choose one answer.
A. Residual uncertainty is an objective measure, independent of an
organization's subjective view of the
risks to which it is exposed.
B. The cost of residual uncertainty is relatively easy to calculate and comprises
an important part of any cost of risk study.
C. Res - Answer :C. Residual uncertainty can be minimized, but doing so is
costly because more has to be spent on attempts to control or finance the risks
involved.
Quiz :Tania has been unemployed for six months, and her unpaid bills are
mounting. She recently damaged the front fender of her vehicle after running
off the road. When seeking repairs to the vehicle, she convinced the auto body
shop to include damages from previous incidents in the estimate. This would
allow her to collect extra money from her insurer. From an insurance and risk
management perspective, Tania's behavior is indicative of a
Choose one answer.
A. Legal hazard.
B. Moral hazard. - Answer :B. Moral hazard.
Quiz :Which one of the following describes how an effective risk management
program should support an organization's pre-loss operational goals?
Choose one answer.
, A. It should ensure that risk management costs are kept to a minimum.
B. It should eliminate uncertainty by identifying and managing loss exposures.
C. It should help ensure that the organization's legal obligations are satisfied.
D. It should ensure that no conflicts exist among the pre-loss goals. -
Answer :C. It should help ensure that the organization's legal obligations are
satisfied.
Quiz :Which one of the following statements is true regarding risk
management techniques?
Choose one answer.
A. Data based on objective risk factors are usually the only criteria considered
in determining appropriate risk management techniques.
B. The risk management techniques selected by for-profit organizations should
be both effective in meeting the organizations' goals and economical.
C. In support of the goal of economy of operations, the risk management
techniques selected by most - Answer :B. The risk management techniques
selected by for-profit organizations should be both effective in meeting the
organizations' goals and economical.
Quiz :Which one of the following is an element of a loss exposure?
Choose one answer.
A. The verification of risk
B. A cause of loss
C. The probability of a loss
D. The occurrence of a loss - Answer :B. A cause of loss
Quiz :The statement "There is a 5 percent chance that John will be injured in
an automobile accident while driving to work tomorrow." is an example of
Choose one answer.
A. Quantifying risk.
B. Verifying risk.
C. Quantifying loss exposures.
D. Indentifying hazards. - Answer :A. Quantifying risk.
Quiz :Dave owns a computer store. He stores backup media copies of
confidential records off site in case there is a fire at the computer store. The
risk control technique Dave is using to protect the confidential records is
Choose one answer.
A. Diversification.
B. Duplication.
, C. Avoidance.
D. Separation. - Answer :B. Duplication.
Quiz :Which one of the following statements regarding monitoring the results
of a risk management program is true?
Choose one answer.
A. A results standard focuses on the quality and quantity of the risk
management activities undertaken by the organization.
B. Risk management professionals generally prefer performance standards
that are solely dependent on the organization's loss record.
C. Activities standards are necessary to obtain a complete picture of the
success or failure of a risk m - Answer :C. Activities standards are necessary to
obtain a complete picture of the success or failure of a risk management
program.
Quiz :Delmond Manufacturing is opening a new manufacturing facility in a
building that it purchased from a competitor. Using the information below,
which one of the following represents the cost of risk of opening the new
facility?
New building cost $60.0 million
Safety system upgrades $6.0 million
Insurance premiums $1.5 million
Retained losses $3.0 million
Risk management department budget at the site $1.0 million
Choose one answer.
A. $7.0 million
B. $10.0 million
C. $11.5 mi - Answer :C. $11.5 million
Quiz :Achieving any post-loss goal involves expending risk management
resources, which may conflict with the pre-loss goal of
Choose one answer.
A. Economy of operations.
B. Earnings stability.
C. Social responsibility.
D. Tolerable uncertainty. - Answer :A. Economy of operations.
Quiz :Another term for cause of loss is
Choose one answer.
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