©BRIGHTSTARS EXAM STUDY SOLUTIONS 8/13/2024 12:27 PM
Fin 424 Final Study Guide Questions With
Correct Answers.
Last year, three Metro City firemen died responding to a fire at a chemical plant, when they were
overcome by toxic fumes. In response, Metro City is purchasing advanced first responder gear. It
includes special flame retardant suits with chemical and explosive fume sensors, air quality
sensors, and heat sensors. Responders will also wear special watches that will track a responder's
pulse, respiration, and blood pressure; and helmets that include video cameras. All of these
sensors will feed data to a computer in real-time. The computer will analyze the data and issue
threat levels and evacuation orders, if necessary. The protective gear Metro City will purchase
and the data transmission and analysis capability illustrate the use of - answer✔✔Smart products.
According to "25 Reasons for Risk Management Failure" (embedded in the assigned reading),
most risk management failures can be traced directly to which of the following? -
answer✔✔Failure of the board of directors
In an effort to reduce expenses, increase profitability, and reduce human errors; Tango Insurance
Company decided to automate most of its personal lines underwriting function. The company
now uses standardized application forms that are submitted electronically to one of the
company's regional offices. At each regional office, a computer with a scanner reads the
applications. The computer has been programmed with acceptable answers to the questions. If
the answers on the application are all acceptable, the policy is automatically issued. Rejected
applications are automatically forwarded to a human underwriter who reviews them. The use of
this technology has reduced the company's expense ratio by two and a half percent, and reduced
the time it takes to issue a policy. Tango's use of computers to evaluate applications
electronically is an application of - answer✔✔Artificial intelligence.
The assigned reading was primarily about - answer✔✔The relationship between risk
management and corporate governance.
Which one of the following is a tool that can be used by fraud investigators to compare
documents and analyze notes? - answer✔✔Text mining
Cyber security breaches are most often the result of which of the following? -
answer✔✔Phishing
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Echo Electronic Components manufactures circuit boards, microchips, and other electronic
products. Given the precision necessary for their products, the manufacturing environment must
be controlled. Temperature, humidity, static electricity and other factors must be monitored.
After losing several batches of products due to human monitoring failures and imprecise
adjustments, the company moved to a system of sensors. The sensors monitor and regulate
temperature, humidity, static electricity, and other factors. The sensors transmit data to and from
each other, and the manufacturing environment is continuously adjusted to assure production is
successful. The network of sensors transmitting data and the autonomous corrective actions
without human interaction is called - answer✔✔Correct answer:
The Internet of Things.
According to guest-speaker Brian Branner, which of the following is the best defense against
cyber risk? - answer✔✔Company culture
Katelyn is a risk manager for ACME Trucking. She has always analyzed auto loss frequency and
severity rates for the fleet. Katelyn would like to collect data on vehicle speeds, braking patterns,
and distance traveled and compare that with the loss history. Which one of the following would
help Katelyn capture and analyze this data? - answer✔✔Vehicle telematics
Which one of the following data capture tools has led to an explosion of risk management
innovation by allowing smart products to transmit data to each other and to central hubs? -
answer✔✔Internet of Things
Which of the following statements is true regarding the evolution of risk and risk management? -
answer✔✔The definition of risk has evolved to include positive as well as negative attributes.
The City of Freeport installed water flow and pressure devices on the water pipes leaving the
main plant. These devices make sure water is flowing properly and that there are no leaks or
clogs which could produce a loss. These types of devices are - answer✔✔Mechanical sensors.
Zebra Company is a start-up that develops safety technologies that can be sold to companies that
are producing autonomous vehicles. One technology Zebra is developing allows an autonomous
vehicle to detect, extract, and analyze images; and then to respond to the images. For example,
the technology would detect a presence in a crosswalk, extract the image, and a computer would
analyze the image. When the image was determined to be a human being, the vehicle would slow
down or stop until the crosswalk was clear. This technology, which is designed to capture and
analyze images, and to act on the recognition of the image; is called - answer✔✔Computer
vision.
Delta Insurance Company sells insurance in Kansas, Oklahoma, Texas, and Missouri. The
company has compiled a policyowner data base that can be used to send text messages when
tornados approach. The company provides early warnings, storm updates from the National
, ©BRIGHTSTARS EXAM STUDY SOLUTIONS 8/13/2024 12:27 PM
Weather Service, and tornado safety measures. The company credits the system with reduced
tornado claims. The use of the texting system is an example of - answer✔✔Preventive analytics.
The National Oceanic and Atmospheric Administration (NOAA), a U.S. Government agency,
monitors tsunami risk. Earthquakes under the sea often cause large waves which can have a
disastrous impact on coastal communities. In addition to monitoring earthquake data and tides,
NOAA recently added a new tool -- tsunami detection buoys. The buoys are placed in the sea
and they are equipped with sensors to detect high wave levels so that an early warning can be
given to a coastal area if an evacuation is needed. This application of the use of smart products
illustrates their use in - answer✔✔Correct answer:
Catastrophe management.
Pennsylvania Railroad (PR) is concerned about the number derailments in recent years. It's not
cost effective to use human assets to inspect tracks, bridges, and trestles. Instead, PR has started
to use drones. A drone can fly low over tracks and above/below bridges and trestles. The drones
record video that is transmitted to corporate headquarters where it is simultaneously scanned for
derailment hazards. In the past six months, the drones detected a track blockage caused by a rock
slide and damage to tracks in a remote area cause by an earthquake. PR dispatched work crews to
make the tracks once again passable, and no derailments occurred. PR's use of drones, video,
real-term video scanning, and computer analysis illustrates which one of the following? -
answer✔✔Preventative analytics
The difference between risk tech and insurtech is - answer✔✔Risk tech goes beyond insurtech
by expanding its focus to making risk financing more efficient and preventing and mitigating
losses in a variety of industries.
Which of the following statements is true with respect to enterprise risk management (ERM)? -
answer✔✔ERM encompasses operation risk management.
ERM is a holistic approach to managing risk.
ERM views risk in terms of threats and opportunities.
Answer is (All of the Above)
Which of the following best explains how smart products can improve risk management? -
answer✔✔They generate big data to which advanced analytics can be applied.
Many auto manufacturers have automated a portion of their assembly lines by introducing a
smart product. The smart product performs repetitive tasks, such as making the same weld on
each vehicle frame as it passes the smart product. These smart products, which can be fixed or
mobile, reduce repetitive motion injuries that humans might suffer. They can also be used to
perform dangerous tasks and in heavy-lifting jobs. These smart products are called -
answer✔✔Robots.
