CPCU 500 - Managing Evolving Risks, 1st Edition Questions & Answers
What was risk traditionally considered? How is it considered now?
-traditionally considered a hazard posed to an individual or organization
-today, known for its potential positive consequences - taking risks is necessary for gr...
CPCU 500 - Managing Evolving Risks,
1st Edition Questions & Answers
What was risk traditionally considered? How is it considered now? - answer -
traditionally considered a hazard posed to an individual or organization
-today, known for its potential positive consequences - taking risks is necessary for
growth
enterprise risk management (ERM) - answer -holistic risk management strategies
-enhanced tools with which risk managers and other decision makers minimize threats
and exploit opportunities
What 2 ideas underlie nearly every important risk management concept? - answer 1.
intersection of different types of risk
2. method for identifying, assessing, and treating all risks
root cause analysis (RCA) - answer identifies a loss's predominant cause
-inherent weakness: can only look backward
-might not identify all root causes and the related events that contribute to a loss and
can be performed only periodically
What fuels the big data revolution? - answer capture, storage, and analysis of data
Flowchart - How big data has transformed the risk management environment - answer
1. Data capture - Internet of Things Sensors
2. Data Storage (Cloud Storage)
3. Data Analytics (Artificial intelligence machine learning)
4. Traditional risk management decisions enhanced through insights derived from big
data
Data Capture - answer enabled primarily by smart products that sense their
environment, process data, and communicate with other smart products and smart
operations through the Internet of Things (IoT)
-these interactions generate the data to which advanced analytics can be applied
Data Storage - answer stored data used for risk management analysis
The decision-making value of data produced by smart products, the IoT, and other data-
capturing technology can be undermined by _________ - more and faster is not
necessarily better. - answer volume, velocity, and veracity
database - answer -blockchain's roots like in database technology
, -collection of structured information stored in discrete units for ease of retrieval,
manipulation, combination, or other basic applications - a virtual filing cabinet organized
like a spreadshet
What is blockchain's primary purpose and how is it used otherwise? - answer -
primary purpose: store information
-distributed database that serves as a collectively shared ledger
ledger - answer -physical or digital
-document in which transactions are recorded
-common denominator is that all ledgers track the chronology of a particular value's
change over time - the results of each recorded transaction
-accurate, comprehensive, and independently verifiable
If the value being tracked in a ledger is connected to something tangible - cash or
inventory- how could it be verified? - answer -verified independently of the ledger by
manually counting inventory
How is virtual currency (cryptocurrency, Bitcoin) tracked and how are people prevented
from spending the same virtual coin in more than one transaction (double-spending
problem)? - answer -create the system of verification and confirmation that makes
the blockchain a reliable ledger and database
-blockchain: distributed database and decentralized ledger that maintains a
continuously growing list of records, called blocks, in chronological order; each time a
new transaction occurs, a new block is created
mining - answer new blocks and the data within are confirmed through a consensus
process called mining
-verification process removes intermediary validation and establishes trust without a
centralized authority
-after a block is confirmed and the data within it is verified through the decentralized
consensus process, the block is time-stamped and added to the preexisting blocks in
the chain, hence the term "blockchain"
2 examples of potential blockchain exploration in the field of insurance - answer 1.
travel insurance - if an airline cancels a flight for a covered reason, a smart contract built
using blockchain technology could automatically enact payment to those with insurance
2. crop insurance - if insured crops suffer damage from the weather, a smart contract
can confirm the loss using weather data and pay claims automatically
-show blockchain's ability to lower costs, thereby allowing consumers to realize savings
data analytics - answer the collection, storage, and sharing of data that empowers
real-time risk management for organizations that use data gleaned from sensors to
react immediately to hazardous situations
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