CPCU Simulated Exam Questions & Answers
Risk is
Uncertainty of outcomes
Recalibrating predictive models to give more weight to recent events is the insurance industry's response to which one of the following evolving risks?
Climate change
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CPCU Simulated Exam Questions &
Answers
Risk is - answer Uncertainty of outcomes
Recalibrating predictive models to give more weight to recent events is the insurance
industry's response to which one of the following evolving risks? - answer Climate
change
Lori and Denise work in the same region at Taunton Insurance. They were working on
individual projects with different objectives but realized that they could help each other
out by sharing information and resources. Which one of the following is the act of
working together to achieve individual objectives rather than a shared objective? -
answer Cooperation
The use of risk quadrants to identify and categorize risk provides a framework for -
answer Holistic risk identification
Hardware Store has been able to control its prices and inventory since it has no
competitors. A new highway currently being constructed is going to allow increased
competition for Hardware Store. According to the quadrants of risk, this risk of increased
competition falls into the category of - answer Strategic risk
Regarding diversifiable and nondiversifiable risk, which one of the following statements
is accurate? - answer Systemic risks are generally nondiversifiable.
Place the following activities in the proper stage of the risk management process.
1. Company X hired a safety consultant to complete a walkthrough of their operations
and advise them of any unsafe conditions or out-of-compliance procedures.
2. Company Y considered purchasing a new type of battery for their phones, but the
board rejected the idea due to the increased risk of product liability claims.
3. Company Z conducted a quantitative risk assessment examining the likelihood and
consequences of the major risks to their company. - answer Identify risks - Company
X
Analyze risks - Company Z
Treat risks - Company Y
, George has received an inheritance and is deciding what to do with the money. He has
limited his options to four choices: donate all the money to his favorite charity, use the
entire inheritance to buy a yacht, invest the inheritance in a small rental property, or use
the entire amount to purchase T-bills. Which one of the following statements is true
regarding the risk involved in George's options? - answer The rental property
presents both pure and speculative risk; property values may increase, and the building
could burn down.
An integral part of the risk management process is defining risk criteria. These criteria
should be aligned with an organization's (select all that apply): - answer Resources,
Objectives, Risk management policy
Sixth National Bank stores all of its financial records in an electronic data base. Sixth
National customers are able to access their accounts on-line with a user identification
number and a password. Last weekend, a computer hacker was able to breach the
firewall of the electronic database and gain access to customer account data. This
operational risk for Sixth National Bank is - answer A systems risk.
Four Grains Cereal Company signed a contract to deliver 250,000 boxes of cereal to a
national supermarket chain at a specified price per box of cereal six months from today.
Between now and when the grain to make the cereal is purchased, the cost of the grain
may increase. If the cost of this important ingredient increases, the profitability of the
transaction will be altered. This financial risk that Four Grains faces is - answer Price
risk.
A 35-year-old female was employed at a company for five years. During her term of
employment the company began having financial difficulty and determined that they
needed to lay off 5 of its 125 employees in order to stay in business. The company laid
off the female employee and 4 other female coworkers. All of the women had a history
of receiving positive employee evaluations. The laid off workers filed a claim against the
company alleging discrimination. Which one of the following best describes the basis of
the employment practices claim filed against the company? - answer Wrongful
termination
Quade Enterprises has been targeted by animal rights groups due to its use of animals
in product testing. One night, bricks are thrown through the front windows of Quade's
corporate headquarters. This act is an example of - answer Vandalism.
Please place the following risk sources into their proper categories? - answer Natural
Risk Sources - Tornado, Mildew, Cave in
Human Risk Sources - Pollution, Explosion, Vandalism
Liability for completed operations is so similar to which one of the following types of
liability exposures that the two are often treated as components of one loss exposure? -
answer Products liability
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