Question 1

Why do supply chains complicate the ERM process?

Accepted Answer

A)   They lead to higher human resource risk.
B)   They lead to higher speculative risks.
C)   A disruption somewhere in the supply chain affects the operations of a firm.
D)   They do not complicate the ERM process at all.E) A) and D)
F) All of the above

Question 2

Workers' compensation insurance covers both job-related injuries and occupational diseases.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is true about speculative risks?

Accepted Answer

A)   A firm cannot profit from its exposure to speculative risk.
B)   The risk/return tradeoff is not applicable to speculative risks.
C)   Risk managers must be tolerant of negative outcomes related to speculative risks.
D)   Speculative risk is not a source of great concern for risk managers.E) C) and D)
F) A) and C)

Question 4

The Big Boy Toy Company's best seller is a futuristic radio-controlled car. The toy is manufactured using a custom mold designed especially for the company by a local artist. If anything were to happen to this mold, the company would have to stop manufacturing the toys until the artist could reproduce the mold. The risk manager's primary concern regarding damage to this mold is probably the:

Accepted Answer

A)   indirect loss that will result while production of the toy is halted
B)   expense of paying the artist to reproduce the mold
C)   extra cost of manufacturing additional toys while the car cannot be manufactured
D)   direct damage to employees that will be laid off while production is haltedE) All of the above
F) A) and C)

Question 5

Which of the following is an appropriate method for calculating the financial impact on the firm that results from the loss of a key employee?

Accepted Answer

A)   Research comparable salaries on employment data websites
B)   Never let these employees be in the same building at the same time
C)   A multiple of the key person's salary
D)   Calculate the net present value of the future salary owed to the employee under his/her existing employment contractE) A) and B)
F) B) and D)

Question 6

Which of the following is not a tort?

Accepted Answer

A)   Battery
B)   Assault
C)   Negligence
D)   Breaking a contractual agreementE) All of the above
F) A) and B)

Question 7

If a private elementary school having a single building were to lose the building in a tornado, it is likely that the largest category of loss would be:

Accepted Answer

A)   property taxes
B)   indirect loss of income and continuing expenses until school returns to its normal status
C)   liability loss
D)   key personnel lossE) A) and C)
F) C) and D)

Question 8

Losses related to intangible property does not include:

Accepted Answer

A)   patents
B)   inventory
C)   human capital
D)   reputationE) B) and C)
F) None of the above

Question 9

All the following are objectives of risk management except:

Accepted Answer

A)   to insure all exposures to loss
B)   minimize reputation risk
C)   minimize supply chain interruption
D)   develop and maintain plant safety programE) B) and C)
F) A) and B)

Question 10

Why is the damage to the property of others also relevant for a firm?

Accepted Answer

A)   It is a speculative risk.
B)   Since a firm needs to pay for the damage to the property of others
C)   Due to the complex supply chains upon which firms rely
D)   It is not relevant at all.E) A) and B)
F) A) and C)

Question 11

Which of the following is true about pure risks?

Accepted Answer

A)   The risk/return tradeoff is applicable to pure risks.
B)   A firm cannot profit from its exposure to pure risk.
C)   Risk managers must be tolerant of negative outcomes related to pure risks.
D)   Pure risk is not a source of great concern for risk managers.E) A) and B)
F) None of the above

Question 12

Foster is suing Geraldine and they are in a contributory negligence state. Foster's total injuries are $100,000, and the jury finds that he was 5% at fault in the incident. How much money will Foster be entitled to collect?

Accepted Answer

A)   $100,000
B)   $95,000
C)   $0
D)   $90,000E) B) and D)
F) A) and D)

Question 13

What is the difference between compensation for personal injuries and punitive damages?

Accepted Answer

Personal injury damages pay for damages ...

Question 14

Most financial risks are insurable.

Accepted Answer

A) True 
 B)False

Question 15

The damage caused by an indirect loss can be greater in amount than the damage caused by direct loss in the same occurrence.

Accepted Answer

A) True 
 B)False

Question 16

Leasing is an example of risk identification.

Accepted Answer

A) True 
 B)False

Question 17

If assumption of the risk is established, it means the defendant usually must pay for damages.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is true about direct losses?

Accepted Answer

A)   Does not include smoke damage to a building
B)   Is a non-financial loss
C)   Has no direct liability consequences for the firm
D)   Often is followed by an indirect loss due to business interruptionE) A) and C)
F) B) and C)

Question 19

From the employer's standpoint, workers' compensation insurance may be seen as a substitute for other types of liability insurance.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following would not normally be identified in the risk identification process?

Accepted Answer

A)   Property Risk
B)   External Risk
C)   Human Resource Risk
D)   Pure RiskE) B) and C)
F) C) and D)

Exam 2: Risk Identification

Why do supply chains complicate the ERM process?

Correct Answer
verified

Which of the following would not normally be identified in the risk identification process?

Correct Answer
verified

Which of the following is true about speculative risks?

Correct Answer
verified

Why is the damage to the property of others also relevant for a firm?

Correct Answer
verified

From the employer's standpoint, workers' compensation insurance may be seen as a substitute for other types of liability insurance.

Correct Answer
verified

Which of the following is not a tort?

Correct Answer
verified

Losses related to intangible property does not include:

Correct Answer
verified

Workers' compensation insurance covers both job-related injuries and occupational diseases.

Correct Answer
verified

Correct Answer
verified

Foster is suing Geraldine and they are in a contributory negligence state. Foster's total injuries are $100,000, and the jury finds that he was 5% at fault in the incident. How much money will Foster be entitled to collect?

Correct Answer
verified

If a private elementary school having a single building were to lose the building in a tornado, it is likely that the largest category of loss would be:

Correct Answer
verified

Most financial risks are insurable.

Correct Answer
verified

All the following are objectives of risk management except:

Correct Answer
verified

Leasing is an example of risk identification.

Correct Answer
verified

The damage caused by an indirect loss can be greater in amount than the damage caused by direct loss in the same occurrence.

Correct Answer
verified

What is the difference between compensation for personal injuries and punitive damages?

Correct Answer
verified
Personal injury damages pay for damages ...
View Answer

If assumption of the risk is established, it means the defendant usually must pay for damages.

Correct Answer
verified

Which of the following is true about direct losses?

Correct Answer
verified

Which of the following is an appropriate method for calculating the financial impact on the firm that results from the loss of a key employee?

Correct Answer
verified

Which of the following is true about pure risks?

Correct Answer
verified

Exam 2: Risk Identification

Why do supply chains complicate the ERM process?

Correct AnswerverifiedShow Answer

Which of the following would not normally be identified in the risk identification process?

Correct AnswerverifiedShow Answer

Which of the following is true about speculative risks?

Correct AnswerverifiedShow Answer

Why is the damage to the property of others also relevant for a firm?

Correct AnswerverifiedShow Answer

From the employer's standpoint, workers' compensation insurance may be seen as a substitute for other types of liability insurance.

Correct AnswerverifiedShow Answer

Which of the following is not a tort?

Correct AnswerverifiedShow Answer

Losses related to intangible property does not include:

Correct AnswerverifiedShow Answer

Workers' compensation insurance covers both job-related injuries and occupational diseases.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Foster is suing Geraldine and they are in a contributory negligence state. Foster's total injuries are $100,000, and the jury finds that he was 5% at fault in the incident. How much money will Foster be entitled to collect?

Correct AnswerverifiedShow Answer

If a private elementary school having a single building were to lose the building in a tornado, it is likely that the largest category of loss would be:

Correct AnswerverifiedShow Answer

Most financial risks are insurable.

Correct AnswerverifiedShow Answer

All the following are objectives of risk management except:

Correct AnswerverifiedShow Answer

Leasing is an example of risk identification.

Correct AnswerverifiedShow Answer

The damage caused by an indirect loss can be greater in amount than the damage caused by direct loss in the same occurrence.

Correct AnswerverifiedShow Answer

What is the difference between compensation for personal injuries and punitive damages?

Correct AnswerverifiedPersonal injury damages pay for damages ...View AnswerShow Answer

If assumption of the risk is established, it means the defendant usually must pay for damages.

Correct AnswerverifiedShow Answer

Which of the following is true about direct losses?

Correct AnswerverifiedShow Answer

Which of the following is an appropriate method for calculating the financial impact on the firm that results from the loss of a key employee?

Correct AnswerverifiedShow Answer

Which of the following is true about pure risks?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Personal injury damages pay for damages ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified