CPCU 500 Questions & 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.
Don is the Risk Manager for Rafferty Corporation. One of his peers, Sally, asks him one
day, "How do you define risk?" When Don replies, which one of the following statements
is accurate? - answer Risk has different meanings within the risk management and
insurance communities.
Mutual Fund Company (MFC) offers a wide array of mutual fund options to investors.
Each mutual fund has a different fund objective and set of investment guidelines that
apply to the fund. While MFC gives considerable freedom to its fund portfolio managers,
they are required to abide by the fund's investment guidelines. To monitor compliance,
MFC developed a computer algorithm. The computer algorithm continuously monitors
each fund's compliance with investment guidelines. If a fund manager violates the
investment guidelines, the computer immediately notifies MFC's internal control director,
and corrective action is taken. MFC's use of the computer algorithm to monitor
investment compliance and to provide notification when corrective action is necessary
illustrates use of - answer Artificial intelligence.
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.
In addition to metal detectors, many airports have installed a second type of scanning
technology for checked baggage and cargo. The checked bags and cargo pass through
a portal with scanners programmed to detect and test for explosive trace fumes. These
scanners, which detect explosives based on air samples, are an example of what type
of sensor used for risk assessment and control? - answer Biochemical sensors.
Autonomous Vehicle Applications (AVA) is a start-up company that develops safety
technologies that can be sold to companies that are producing autonomous vehicles.
,One technology AVA 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.
Which one of the following statements is true with regard to preventive analytics? -
answer Preventive analytics uses smart products and data analytics to identify root
loss causes and their implications.
The traditional definition of risk management reflects the traditional concept of risk as -
answer Negative.
Data Entry Company (DEC) offers customers data entry services. A customer can hire
DEC to enter survey data to be analyzed. Many DEC employees spend long hours
entering data on a computer. DEC has experienced neck strain and wrist pain
complaints from their employees, increasing the company's workers compensation
costs. DEC investigated the complaints of its data-entry employees. DEC adopted
curved keyboards for data entry, wrist-rests for those entering data, and uniform chair
heights and display monitor heights to reduce neck strain claims. The science of
designing work spaces based on the health concerns of those who will operate in the
work space is called - answer Ergonomics.
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.
AMRM Insurance Company sells insurance in Virginia, North Carolina, South Carolina,
and Georgia. The company has compiled a policyowner data base that can be used to
send text messages when hurricanes approach. The company provides early warnings,
storm updates from the National Weather Service, and hurricane safety measures. The
company credits the system with reduced hurricane claims. The use of the texting
system is an example of - answer Preventative analytics.
Clear-Rite Company specializes in the clean-up of hazardous chemical spills. Workers
performing clean-up operations must use safety suits to prevent exposure to the
chemicals. The suits include pulse and respiration monitors, body temperature sensors,
and chemical sensors. The monitors and sensors report data to a mobile operations
center which is deployed to each clean-up site. The pulse and respiration monitors and
the sensors that are part of the protective gear are called - answer Wearable
technologies.
Take Your Order (TYO) is a company that specializes in taking product orders for
vendors. The manufacturer of a product can run a television or internet ad for a product
, with a toll-free number. Customer calls for the products are routed to TYO, where one
hundred operators are available to receive the calls. Each operator is assigned a
cubicle with a computer terminal, video display monitor, and a telephone. TYO
experienced high workers compensation claims from its operators, claiming neck strain,
eye strain, and wrist pain. In an effort to reduce such injuries, TYO evaluated each
operator's work area. The height of chairs and video monitors were adjusted, curved
computer keyboards and wrist-rests were provided, and the telephones were replaced
with audio headsets. Workers compensation costs dropped significantly. The science of
designing work spaces based on interaction between people and the equipment in the
work s - answer Ergonomics.
William is a risk manager for Green Mountain Trucking. He has always analyzed auto
loss frequency and severity rates for the fleet. William 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 William capture and analyze this data? -
answer Vehicle telematics
In an effort to reduce expenses, increase profitability, and reduce human errors; ABC
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. ABC Insurance Company's use of computers to evaluate
applications electronically is an application of - answer Artificial intelligence.
Which one 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 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
Catastrophe management.
Southwest Interstate Railroad (SIR) 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, SIR 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
