Why are some mutual insurers referred to as “assessment mutuals”? A) They charge low premiums because the loss exposures of their insureds are thoroughly assessed before a policy is written. B) They are noted for being very thorough in their assessment of investment opportunities. C) They are assessed for state premium taxes only if they […]
The terrorism risk in the United States A) is of no concern to private companies. B) is limited to attacks by foreign nationals. C) can be addressed through risk control and insurance. D) is an uninsurable risk. ANSWER Answer: C
Which of the following is a demographic factor that has increased losses from climate change in the United States? A) The increasing life expectancy in the United States. B) The increasing population in Southern states such as Florida, Texas, and South Carolina. C) The declining fertility rate (live births per women of child-bearing age) in […]
An emerging concern for risk managers is the greater volatility that has been observed in weather patterns—higher high temperatures, lower low temperatures, record rainfall, drought, etc. Collectively, this risk is called A) seismic risk. B) hurricane risk. C) speculative risk. D) climate change risk. ANSWER Answer: D
Which of the following statements about the risk of terrorism in the United States is (are) true? I. Congress created a federal backstop for terrorism claims. II. Coverage for losses attributable to terrorism is not marketed by private insurers in the U.S. A) I only B) II only C) both I and II D) neither […]
A bank stores depositor data electronically. The data include financial account values, social security numbers, and other information. An outside party was able to gain access to the bank’s customer data through unauthorized access to the bank’s computer system. The outside party was able to steal money from the accounts and to sell customer data, […]
ABC Company in considering a loss control investment. The project will cost $100,000. It will generate an after-tax net cash flow of $60,000 one year after investment and an after-tax net cash flow of $60,000 two years after investment. The present value of $1 received one year from today assuming a 6 percent rate is […]
The first step in the enterprise risk management process is A) risk analysis. B) implementing and monitoring the program. C) risk identification. D) selection of risk treatment measures. ANSWER Answer: C
Hedge Fund Company offers a mutual fund to investors. Fund managers are concerned about fund volatility. They analyzed the fund to determine the worst loss likely to occur in a calendar quarter, assuming a 90 percent level of confidence. The worst probable loss is known as the fund’s A) unrealized capital gain. B) value at […]
When announcing that an enterprise risk management program would be implemented at XYZ Company, the president of the company observed, “We must overcome the silo mentality for the program to be successful.” The “silo mentality” refers to A) over-emphasis on pure risks and ignoring speculative risks. B) using too much of one risk treatment measure […]
