IC86 - Risk Management Exam - 10

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Q 1. The revised Basel Capital Accord that is the 'Basel II ' Accord - 2004 has incorporated various revisions and this includes _____. 1. Changes in the approach to the treatment of Expected losses and Unexpected losses and the treatment of securities

Only 1

Only 2

Only 3

All 1, 2 and 3

Both 1 and 3

Q 2. Which of these is /are PURE RISK ? 1. Earthquake 2. Speculating in stock markets 3. Machinery Breakdown

Only 1

Only 2

Only 3

Both 1 and 2

Both 1 and 3

Q 3. ERM can also be described as _____. 1. A risk-based approach 2. An uncertainty-based approach 3. A certainty-based approach

Only 1

Only 2

Only 3

Both 1 and 2

Both 1 and 3

Q 4. Moral hazard means the act of insuring _______ that the desired outcome will occur. 1. Increases likelihood 2. Guarantees 3. Decreases likelihood

Only 1

Only 2

Only 3

Both 1 and 2

Both 2 and 3

Q 5. What is the advantage of a written policy statement?

It organizes the risk management objectives

Coordinates operations between departments

Improves communication channels and MIS

Achieves general objectives of a risk management program

All of the above

Q 6. Concerning CAPTIVE INSURERS, identify the correct statement(s) - 1. Captive insurers are an alternative to insurance companies 2. Captives are considered to have several advantages over traditional insurance coverage 3. Companies utilizing c

Only 1

Only 3

Both 1 and 2

Both 2 and 3

All 1, 2 and 3

Q 7. Identify the example(s) of Prospective finite risk reinsurance covers. 1. Financial quota shares 2. Double trigger concepts 3. Loss portfolio transfers

Only 2

Only 3

Both 1 and 2

Both 1 and 3

All 1,2 and 3

Q 8. Suggest how should the costs related to risk management activities be allocated. 1. Allocate the costs to the risk management vertical, which can be specially created to support this cost 2. Treat these costs as overhead expenses 3. Allocate these c

Only 1

Only 3

Both 1 and 2

Both 2 and 3

Both 1 and 3

Q 9. Which of the finite risk reinsurance covers protects against the contingencies associated with future loss events?

Prospective finite risk reinsurance

Retrospective finite risk reinsurance

Future finite risk reinsurance

Both Prospective and Retrospective finite risk reinsurance

Neither Prospective and Retrospective finite risk reinsurance

Q 10. Due to a sudden change in Government policies, the tax burden on a company increases. Identify which risk is this ? 1. Market Risk 2. Physical Risk 3. Social Risk

Only 1

Only 2

Only 3

Only 1 and 2

Only 2 and 3

Q 11. Insurance securitization and other techniques of risk transfer to the capital markets are used __________.As a means of covering insurance risks tools for additional and alternative capacity if sufficient risk capacity is not available in traditional reinsurance markets

A) Only statement 1 is correct

B) Only statement 2 is correct

C) Both statements 1 and 2 are correct

D) Neither statement 1 nor 2 is correct

E) Both statements 1 and 3 are correct

Q 12. What is ART concerning insurance and related risk management?

Actual Risk Theory

Accepted Risk Transfer

Alternative Risk Transfer

Aggregate Risk Training

Adaptive Risk Technique

Q 13. Which type of risk is connected with losses caused by the irregular action of the forces of nature or the mistakes and misdeeds of human beings?

Social Risk

Personal Risk

Static Risk

Dynamic Risk

Pure Risk

Q 14. Identify the advantages of the physical inspection/surveys method of risk identification: Personal visits and interactions with plant personnel help the risk manager develop a rapport with them, leading to a better understanding of __________.

A) The insurance market

B) The operational environment and potential risks

C) The financial health of the company

D) The company's marketing strategies

Q 15. Risk control has often been regarded as synonymous with _______.

Risk Avoidance

Risk Control

Wealth Management

Risk Management

Risk Insurance



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