Which of the following types of loss exposures may be appropriately handled through the purchase of insurance?I. High-frequency, low-severity loss exposures II. Low-frequency, high-severity loss exposures A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: B
Date: September 19th, 2020
Which of the following types of loss exposures are best handled by the use of avoidance? A) low-frequency, low-severity loss exposures B) low-frequency, high-severity loss exposures C) high-frequency, low-severity loss exposures D) high-frequency, high-severity loss exposures ANSWER Answer: D
Date: September 19th, 2020
Low-frequency, low-severity loss exposures are best handled by A) avoidance. B) retention. C) insurance. D) noninsurance transfer. ANSWER Answer: B
Date: September 19th, 2020
Cal was just hired as XYZ Company’s first risk manager. Cal would like to employ the risk management process. The first step in the process Cal should follow is to A) evaluate potential losses faced by XYZ Company. B) formulate a treatment plan for XYZ Company’s loss exposures. C) identify potential losses faced by XYZ […]
Date: September 19th, 2020
All of the following statements about the administration of a risk management program are true EXCEPT A) The risk manager is an important part of a firm’s management team. B) A risk management policy statement can be used to educate top executives about the risk management process. C) If a risk management program is properly […]
Date: September 19th, 2020
All of the following are potential advantages of retention EXCEPT A) lower expenses. B) increased cash flow. C) encouragement of loss prevention. D) protection from catastrophic losses. ANSWER Answer: D
Date: September 19th, 2020
Members of Mid-South Petroleum Distributors, a trade group, had trouble obtaining affordable pollution liability insurance. The members formed a group captive that is exempt from many state laws that apply to other insurers. This group captive is called a(n) A) reinsurance pool. B) Lloyd’s association. C) alien insurer. D) risk retention group. ANSWER […]
Date: September 19th, 2020
A restaurant owner leased a meeting room at the restaurant to a second party. The lease specified that the second party, not the restaurant owner, would be responsible for any liability arising out of the use of the meeting room, and that the restaurant owner would be “held harmless” for any damages. The restaurant owner’s […]
Date: September 19th, 2020
Acme Company has three identical manufacturing plants, one on the Texas Gulf Coast, one in southern Alabama, and one in Florida. Each plant is valued at $200 million. Acme’s risk manager is concerned about the damage which could be caused by a single hurricane. The risk manager believes there is an extremely low probability that […]
Date: September 19th, 2020
Which of the following statements about self-insurance is (are) true? I. It is a form of planned retention. II. State law usually prohibits its use for workers compensation. A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: A
Date: September 19th, 2020
