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 […]
Which of the following statements is (are) true with respect to the time value of money? I. Money received today is worth more than the same amount of money received in the future. II. The present value of a future amount is greater than the future amount A) I only B) II only C) both […]
A method of characterizing the relationship between two or more variables and then using the characterization to make a prediction is called A) loss analysis. B) time value of money analysis. C) regression analysis. D) capital budgeting analysis. ANSWER Answer: C
A table showing losses that could occur and the corresponding chance that each loss could occur is called a(n) A) underwriting cycle. B) capital budget. C) loss distribution. D) risk map. ANSWER Answer: C
Which of the following statements is (are) true regarding the net present value of a capital investment? I. Net present value does not consider time value of money. II. A positive net present value represents an increase in value to the firm. A) I only B) II only C) both I and II D) neither […]
The process of determining which set of investments in plant and equipment to undertake is called A) regression analysis. B) loss forecasting. C) time value of money analysis D) capital budgeting. ANSWER Answer: D
A computerized data base that permits risk managers to store and analyze risk management data is called a A) risk management information system. B) risk management Intranet. C) risk management web site. D) risk map. ANSWER Answer: A
Millie is risk manager of JKL Company. She is considering an investment in a loss control project. The project will cost $40,000. Assuming a 10 percent discount rate, the present value of the future net cash flows that this project will generate is $60,000. What is the net present value (NPV) of this project? A) […]
Which of the following statements is (are) true with regard to the use of technology in risk management programs? I. Risk management Intranets are networks intended for an internal audience. II. Risk management information systems can be used to store and track workers compensation claims data. A) I only B) II only C) both I […]
A grid charting the potential frequency and severity of losses is called a A) risk management information system. B) risk management Intranet. C) risk management web site. D) risk map. ANSWER Answer: D
