Risk Management Temple Exam 2 Practice

These questions are part of the practice quiz. Start practicing

• Which statement best describes the characteristics of an effective risk pool?
• Which statement about risk transfer and economic benefit is true?
• Distinguish between preventive and mitigative controls with examples.
• How do you conduct a cost-benefit analysis for risk mitigation?
• What is a captive insurer?
• Which statement about qualitative risk assessment is most accurate?
• Which governance body is typically responsible for approving a risk appetite statement and ensuring ongoing oversight?
• Can an insurer deny the claim of an individual who misrepresented statements?
• Retention in risk management is described as what?
• What is residual risk?
• In the loss management framework, P* represents which of the following?
• Which statement about identifying controls for risk management is correct?
• Which statement best explains why insurers avoid catastrophic events causing many claims at once?
• Which statement correctly distinguishes risk appetite from risk capacity?
• Worry Value will increase if Insurance coverage decreases?
• What best describes a Group Captive?
• What is the effect of adding members to a risk pool on expected payouts and insurer risk?
• What is threat modeling and how does it support risk management?
• Who approves the risk appetite statement?
• Unfunded Retention means you pay losses as they occur for low frequency and low severity.
• Subrogation scenario: If insurer B pays to Driver B, who may sue to recover damages?
• What is an adverse selection death spiral?
• Which statement about risk heat map interpretation is correct?
• Low Frequency, Low Severity risks are typically managed by which approach?
• According to the Large Loss Principle, which statement is true?
• What is residual risk and why is it important to monitor?
• If a statement is an opinion or belief rather than a fact, what must the insurer prove to deny a claim?
• How do risk appetite and risk tolerance differ in guiding decision making?
• Why do insurers prefer a large number of similar objects?
• How do preventive and mitigative controls complement each other?
• Which statement best describes crisis management within the risk management lifecycle?
• In insurance terms, which term describes a false statement made?
• A risk appetite statement is:
• What does EMV stand for and what data does it use?
• Which statement about risk pooling is true?
• Which principle states that a small subset of risks accounts for most impact, guiding prioritization in risk management?
• Which of the following is a form of indemnification?
• ASO in the context of risk management stands for what?
• Actuarially Fair Premium is defined as the price that covers which concept?
• As risk pools grow, what happens to the insurer's risk due to the law of large numbers?
• What does an insurance contract agree to do?
• What is the effective process for approving a risk appetite statement?
• In disability insurance, why might benefits differ between physical disability and mental disability?
• Which statement best describes the relationship between scenario planning and contingency planning?
• What is the role of crisis management in protecting stakeholders?
• Self-insurance is described as which of the following?
• Which of the following is a contract-based control used by insurers to mitigate adverse selection?
• Where are captives commonly located due to regulatory and tax advantages?
• What is the second method listed to control adverse selection?
• Concealment is
• What is the insurer's concern with catastrophic loss events?
• Which statement best defines risk tolerance?
• Which of the following is NOT listed as an advantage of self-insurance?
• Which of the following best illustrates a proper risk pool example described in the material?
• Which approach best describes cyber risk assessment?
• Sensitivity analysis in risk management is primarily used to ...
• Which statement best describes a risk appetite framework?
• Which statement about the Utmost Good Faith principle is true?
• In a cost-benefit analysis for risk mitigation, which metric is commonly used to compare alternatives?
• What is a risk register and what purpose does it serve in risk management?
• What is the purpose of scenario planning in risk management?
• Which statement best describes risk-based testing focus?
• What is the role of risk appetite in prioritization?
• What are warranties?
• What is the purpose of Monte Carlo simulation in risk analysis?
• Self-insurance is best described as?
• High Worry Value is associated with which condition?
• Which scenario represents a catastrophe that can threaten solvency?
• Subrogation is defined as:
• What does a risk heat map illustrate?
• Insurable Interest: Which statement best describes it?
• Which description aligns with qualitative risk assessment?
• Distinguish between qualitative and quantitative risk assessment with a practical example for each.
• A good homogeneous pool results in what outcome regarding AFP?
• The Loss Matrix shows indicated dollar amounts for what?
• What best describes a Single Parent Captive?
• What is the formula for Expected Monetary Value (EMV)?
• Which statement about Hold Harmless Agreements is true?
• Unfunded Retention means what?
• What is a Critical Risk Indicator (KRI) used for?
• What is a contingency plan?
• In life insurance, who must have insurable interest in the insured S?
• What typically happens in a hard insurance market?
• What does Insurance Demand require?
• Which statement best describes a preventive control?
• Risk maturity measure is best described as?
• High Frequency, High Severity results in which approach?
• Explain the role of scenario analysis in risk assessment.
• Which factor best predicts the effectiveness of risk controls?
• Which approach is listed as a solution to adverse selection?
• What is the objective of a risk register review?
• Why is risk communication essential and who should be informed?
• Describe common qualitative scoring scales used in risk assessment.
• Worry Value is defined as the difference between Pmax and P*?
• Which statement about the relationship between frequency, severity, and loss prevention is correct?
• Which statement correctly distinguishes inherent risk from residual risk?
• Which is the other contract-based control besides deductibles?
• Funded Retention is characterized by which practice?
• In True Risk Transfer, what is the maximum share of the risk portfolio that the parent can hold?
• What is the purpose of indemnification?
• List the four common risk response strategies and give a brief example of each.
• Which approach can cover catastrophic losses in a self‑insurance setup?
• TPA in the context of risk management stands for what?
• In the context of captive insurers, which type of claim would typically not be covered unless deemed necessary?
• One of the purposes of subrogation is to?
• Which of the following is a fundamental control specifically designed to reduce fraud risk by separating responsibilities?
• Which administrative activities are commonly required by firms that self‑insure?
• Which option best describes funded retention?
• Which items are typically recorded in a risk register?
• The S in S O B stands for?
• Active Retention is defined as?
• What does risk maturity measure in risk management?
• Low Worry Value is associated with which condition?
• Which of the following is a solution for catastrophic risks?
• What is a control self-assessment (CSA) and its primary benefit?
• Which condition yields the lowest Worry Value?
• Losses Are Accidental or Unintentional: Which statement explains its rationale?
• What is a risk appetite framework?
• Name a contractual mechanism used by insurers to control adverse selection.
• Which of the following are examples of self-insurance?
• What is a disadvantage associated with catastrophic loss possibility?
• Which statement describes a risk transfer strategy?
• How can you measure the effectiveness of risk controls?
• Define risk and explain its two key dimensions used in risk assessment.
• What is a KRIs dashboard and how is it used?
• Which insurance products are listed as having adverse selection issues?
• Which of the following is a violation of indemnification?
• Pmax represents what?
• One purpose of Subrogation is to?
• Which condition would correspond to Low Frequency, High Severity in risk management?
• What happens if a warranty is breached?
• In insurability terms, what does 'Insurance Supply' describe?
• An example of a Hold Harmless Agreement would be which scenario?
• What is the primary purpose of a KRIs dashboard?
• What is the purpose of risk governance in an organization?
• Which statement explains why some losses are hard to quantify for insurance purposes?
• What is stress testing in risk management and when is it used?
• Differentiate between risk quantification and risk prioritization.
• A risk owner is best described as who and what are their responsibilities?
• What is third-party risk management and why is it important?
• High Frequency, Low Severity results in which approach?
• Which statement about risk ownership is most accurate?
• Which statement best describes a Control Self-Assessment (CSA) process?
• Under a lease, who is financially responsible for property losses that occur during occupancy?
• What is risk modeling?
• What are Key Risk Indicators (KRIs) and how are they used in risk management?
• Why losses must be accidental or unintentional for insurability?
• Which insurance product is most susceptible to adverse selection?
• If the maximum possible loss increases while P* remains unchanged, Worry Value will increase?
• In life insurance contracts, S stands for?
• What does a Hold Harmless Agreement primarily do?
• Which statement best defines insurance?
• Monetary Cost is equal to which of the following?
• Why should losses not be catastrophic to the insurer?
• Worry Value will increase if the maximum possible loss increases?
• What does the principle of utmost good faith require in practice?
• If Worry Value increases, what happens to Total Cost?
• Low Frequency, High Severity risks are typically transferred via which mechanism?
• Which statement about KRIs is most accurate?
• Which control is commonly used to reduce fraud risk by separating duties?
• Worry Value will increase if which condition occurs?
• If you buy insurance with a premium, which two risk management strategies are being illustrated?
• What is a primary purpose of forming a captive insurer, as noted in the material?
• In an adverse selection death spiral, why do premiums rise?
• Which are the two key dimensions used in risk assessment?
• Which statement about risk assessment methods is correct?
• Time Value of Money in self-insurance means?
• How does a likelihood-impact matrix assist in prioritizing risks?
• Which statement about insurable interest is true?
• How are probability and impact combined to yield a risk level?
• Total Cost is the sum of Worry Value and which component?
• What is the primary way insurance contributes to risk management?
• Which of the following is an example of regulatory risk and how can it be mitigated?
• In life insurance, which relationship must have insurable interest in the insured life S?
• What is the main way to control adverse selection?
• Which scenario best describes a risk that could threaten insurer solvency due to aggregation?
• What is the difference between a control and a control objective?
• Which statement best describes Passive Retention?
• Which of the following statements about risk assessment methods is most accurate?