CPCU 500- Assignment 2 Questions & Answers
The fundamental purpose of a risk management framework is to
A. Reduce the cost of risk.
B. Define and eliminate potential losses.
C. Maximize profits for all stakeholders.
D. Integrate risk management throughout the organization.
D. Integrate risk m...
CPCU 500- Assignment 2 Questions &
Answers
The fundamental purpose of a risk management framework is to
A. Reduce the cost of risk.
B. Define and eliminate potential losses.
C. Maximize profits for all stakeholders.
D. Integrate risk management throughout the organization. - answer D. Integrate risk
management throughout the organization.
Risk can be classified as subjective or objective. Which one of the following statements
is correct with respect to these risk classifications?
A. Risk managers focus on objective risk and attempt to avoid allowing subjective risk to
affect their decisions.
B. Individuals' subjective perception of risk in a given set of circumstances is typically
much higher than the objective risk.
C. Subjective risk can exist even where objective risk does not.
D. Subjective risk is risk associated with individuals; objective risk is risk associated with
objects or things. - answer C. Subjective risk can exist even where objective risk
does not.
During the past year, International Toys has undertaken four capital projects. The
company has renovated and refurbished one of its aging warehouse buildings. It has
purchased the most recent version of its current order processing computer software. It
has added two trucks to its fleet of delivery vehicles. Lastly, it has purchased a new
production machine that will allow it to launch a new product line. Which one of the
following company projects is the most speculative risk?
A. The software upgrade
B. The warehouse refurbishment
C. The two new trucks
D. The new production machine - answer D. The new production machine
In an effort to grow its personal lines book, an insurer decides to offer discounts on
homeowners and personal auto insurance to the employees of its largest business lines
account. Which one of the following risk measures is most likely to increase as a result
of this marketing decision?
A. Time horizon
B. Volatility
C. Correlation
D. Consequences - answer C. Correlation
An organization must meet the standard of care that it owes to others in order to ensure
that
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