CISR Elements of Risk Management Practice Test

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• The statement that insurance is a transfer of risk is false.
• Which metric represents the total cost of risk for an organization, including insurance, loss control, and claim handling?
• What term best describes the group of people from inside the organization who contribute to risk management?
• An agreement where one party assumes the liability inherent in a situation, thereby relieving another party of that liability is called
• This word is used interchangeably with the word 'incident.' A(n) ___ is an incident that may or may not become a claim.
• Risk is defined as a condition of either positive or negative ____ arising from a given set of circumstances.
• The two parts of the final step in the risk management process are ___ and ___.
• Which option best completes this description: The internal network comprises people within the organization who contribute to risk management.
• The ongoing implementation and monitoring of the risk management process is called which of the following?
• Government regulation, new legislation, and compliance are examples of risks in which general class of risk?
• The head of a "fish" is the identified problem, incident, or accident in a(n) ____.
• What is the term for the amount demanded for payment after a loss?
• _____ use historical loss data to predict future risk frequency and severity.
• Which type of review assesses adherence to statutes and regulations across an organization?
• An action intended to isolate an exposure from other exposures, perils, or hazards is called
• Which of the following is an example of a personal attribute that risk managers consider when selecting network members?
• In the risk identification method, _____ analysis, risk managers examine historical information and data to identify exposures and their valuations.
• Legal costs and legal decisions are examples of risks in which general class of risk?
• Which chart is used to illustrate cause-and-effect relationships and is also called the fishbone diagram?
• Visits to physical sites to identify exposures to risk are performed through which activity?
• Examination of an organization's financial information to identify and value its exposures and assets is best accomplished by which technique?
• When building networks, which attribute is most associated with effective collaboration?
• Identification of exposures and perils arising from insurance coverage gaps, insufficient limits, coverage limitations, and exclusions is best described as which type of review?
• A large retail company installs a fire suppression system. This is an example of which risk-control measure?
• Which method uses historical data to analyze exposures and losses to identify trends?
• What is a cause of loss?
• Checklists are an efficient means of covering all areas of an operation.
• Which term describes creating copies of assets so operations can continue after a disruption?
• A(n) _____ is an event that may lead to a loss or a claim, or an event that may cause a business interruption.
• Which term describes a method where an organization funds losses using a mix of internal reserves and external tools such as reinsurance?
• A machine shop requires employees to use personal safety equipment while operating drill presses. This is an example of which risk-control measure?
• What term describes an organization's tolerance for risk?
• What is the isolation of an exposure from other exposures, perils, or hazards called?
• An action intended to interrupt a sequence of events that lead to loss is called
• The process of spreading exposures or activities over several locations.
• Which term refers to a program under which the insurer bears the entire cost of losses in exchange for a fixed premium?
• The establishment of backups for critical systems or operations is called
• Which term is an unplanned event definite as to time and place that results in injury or damage to a person or property?
• The event that disrupts normal activities and may lead to a business interruption is called which term?
• In risk management, achieving objectives typically requires input from which two networks of people?
• The total dollar amount of all losses for a given period of time is called Severity.
• Which plan involves the insured bearing the initial portion of each loss up to a limit?
• Which of the following is NOT listed as a step in the Risk Management Process?
• Unlike pure risk, _____ presents the opportunity for gain.
• The concept calculated as loss frequency multiplied by loss severity is known as:
• Which general risk class includes government actions such as changes in trade policy or regulatory shifts?
• Patents and intellectual property are examples of which type of property?
• Which area represents an organization's exposure related to people and staffing?
• The use of internal funds to cover possible losses and possibly external funds through reinsurance or excess coverage
• Which term describes an event that may lead to loss or business interruption?
• A consideration in exchange for a promise of indemnification is called
• Which technique is used to examine past exposures and losses to identify patterns?
• ______ is a visual analytical tool that identifies all risks to an organization and indicates their frequency, on a scale from low to high, and their potential impact, or severity, on a scale from low to high.
• How many steps are listed in the Risk Management Process?
• An accident that occurs over an extended period of time is called a(n) _____.
• Which tool is used to visually depict the steps in a process or system?
• Which term describes the act of moving function or exposure to another party to reduce risk?
• A(n) ____ is a factor that increases the likelihood that a peril will occur.
• In a(n) ___ risk financing plan, an insured elects to reimburse an insurer for losses up to a stated amount.
• An insured who shows no regard for insured property demonstrates which hazard?
• Risk management surveys are more effective at the company or event level because they reveal more industry-specific information.
• The use of external funds to pay losses is called a(n) ___ of financial responsibility.
• Which general class includes risks from new laws and regulatory changes?
• Contributions from experienced individuals in identifying exposures are captured via which approach?
• A clause that limits damages that can be recovered under a contract before an event occurs is known as
• A mixing paddle on a faulty bakery mixer snaps and strikes an employee's hand. The employee's hand is cut and bleeding.
• Which term describes action aimed at reducing the severity of losses after an incident occurs?
• Which term best describes a condition that increases the likelihood of a loss, such as a wet floor?
• Movement of some or all risk to another party is called
• Which analysis measures total anticipated benefits after costs are subtracted?
• A car dealership sells its sport utility vehicles from a suburban lot and its compact and hybrid cars from its downtown location. This arrangement illustrates which risk-management concept?
• ___ property can be seen or touched and includes real property like buildings and personal property, such as equipment.
• A risk manager carries out ______ to seek information that is initially difficult to measure mathematically.
• Which concept captures the idea that risk perception varies with expertise?
• In risk identification, which analysis relies on historical records to identify exposures and their values?
• What term describes the total amount of losses in a given period divided by the total number of claims?
• Which statement accurately describes pure risk in contrast to speculative risk?
• An unexpected and unintentional event that tends to result in damage or injury is called a(n) _____.
• Which component of the risk management process focuses on reducing the probability or impact of losses?
• The insured reimburses the insurer a portion of each loss up to a stated amount.
• A graphical depiction of a process or system is produced by which method?
• Which term describes the movement of risk to another party through formal arrangements?
• Which term is a response to a focus on the frequency with which events occur?
• The elimination of risk.
• Which description best matches the process of examining current policies and procedures for the purpose of identifying exposures?
• A transferee that takes contractual responsibility for the financial consequence of a risk
• The two types of risk transfer are ____ and ____.
• Patents and intellectual property are examples of ____ property.
• Which option lists common root causes of accidents?
• Which is an example of a personal attribute relevant to selecting network members?
• A response to a focus on the severity of incidents in an effort to recognize risk and take action to lower losses.
• A risk manager uses a(n) ____ analysis to systematically drill down to the cause of an incident.
• After several cases of babies swallowing ornaments decorating a crib mobile, the manufacturer ends production of the mobile. This is an example of which risk-management strategy?
• What term is a demand for payment or an obligation to pay as a result of a loss or occurrence?
• The number of claims that occur or that an insurer expects to occur within a given period of time is labeled _____.
• Which term refers to avoiding the risk by terminating the activity or product causing it?
• Which of the following is a personal attribute that enhances collaboration among network members?
• Which of the following best describes systematic searches for exposures, perils, and hazards?
• A transferor with a relationship with a transferee
• The result of a pure risk is some _____.
• ____ are useful for understanding product development processes, decision making processes, architectural site analyses, and scheduling processes.
• Validation and refinement of loss data allow for the ____ of risk factors.
• Which term refers to an unplanned event with a specific time and place that causes injury or property damage?
• Which instrument is primarily used to systematically collect data across multiple areas of an operation?
• Which term describes the magnitude of a loss per incident?
• A(n) ____ clause is a pre-event limitation of the amount, type, or method of calculation of damages available by one or both parties to an agreement
• An older building engineered to withstand winds less than 110 mph, or a tornado in the EF1 damage category, is an example of which risk concept?
• What term describes an accident extended over time rather than a single event?
• What term is a situation, practice, or condition that may lead to an adverse financial consequence or loss; an activity or resource; people or assets?
• ______ involves isolating an exposure from other exposures, perils, or hazards.
• What is the term for the transfer of risk to another party, such as through insurance or contracts?
• An ice cream start-up builds a second walk-in freezer in its warehouse. This illustrates which risk-management concept?
• Which diagram depicts an organization's financial ability and risk appetite?
• Which term is the process of placing assets in multiple locations to reduce the impact of a single loss?
• ____ is an action taken to minimize the severity, or budgetary impact, of an unprevented loss
• The acquisition of funds at the most favorable or optimal cost to pay losses is called
• Which term describes reducing the severity of losses after they occur by limiting impact?
• Which of the following best defines exposure?
• Which term is used for the party that receives protection against losses by paying premiums?
• ___ retention is the portion of expected losses an organization is willing and able to retain.
• Loss of reputation, brand damage, and social trends are examples of risks in which general class of risk?
• _____ describes an organization's ability or inability to assume financial responsibility for loss.
• Which statement best explains a reason to involve both internal and external networks in risk management?
• What term means creating asset backups?
• _____ is the chance something will happen. It is also known as frequency.
• Which term is defined as a factor that increases the likelihood of a peril?
• A condition that increases the probability or severity of loss, such as aging infrastructure, is best described as which term?
• A(n) ____ transfer
• Which of the following lists the steps of the Risk Management Process in the correct order?
• A loss has occurred but is unlikely to occur again in the future.
• A(n) ____ agreement is an arrangement whereby one party assumes the liability inherent in a situation, thereby relieving another party of that liability
• A(n) ____ takes contractual responsibility for the financial consequence of a risk.
• Which option best describes a typical external network member?
• A spill on a supermarket aisle is an example of a ____ because it increases the likelihood that someone will fall.
• Which term is defined as the product of loss frequency multiplied by loss severity?
• Perceptions of risk depend upon an individual's job function or area of expertise.
• Insurance carriers that are considered ___ are admitted and licensed by the states in which they operate.
• Which approach relies on input from experienced individuals to identify exposures?
• Which term describes the action of isolating an exposure from other exposures to reduce risk?
• A cyberattack is an example of which term?
• _____ are an organization's internal people exposure.
• Which term is the action of avoiding risk by not engaging in the activity?
• What term is a reduction in value?
• Which general class includes risks from currency fluctuations affecting costs?
• In risk management, which networks should be engaged to gain diverse perspectives?
• The dollar amount inflicted by a given loss or catastrophe, or the aggregate dollar amount of all losses for a given period of time, is defined by the word _____.
• What term is an event that disrupts normal activities and may become a loss or business interruption?
• Including external stakeholders in risk assessment helps to achieve what?
• Implementation of a risk management plan relies heavily on the risk manager's control of an organization's resources.
• _____ describes the impact of an event, should that event occur.
• A waste management company establishes a compost facility at a site separate from its landfill facility to prevent contamination. This illustrates which risk-management concept?
• Loss data validation allows for the prioritization of risk factors.
• What is a primary benefit of combining internal and external networks in risk management?
• Which term describes the complete elimination of an exposure to avoid the chance of loss?
• Personal attributes help determine network fit, including which sample attribute?
• A promise of indemnification for specified losses in exchange for payment of premium
• The potential for several buildings to be damaged by heavy winds within Tornado Alley is an example of which risk concept?
• The term for susceptibility to loss is
• Which general class includes damages such as fires and bodily injury?
• Which term best describes the potential for loss present in a situation before any loss occurs?
• Which two activities constitute the final step in the risk management process?
• Identification of contractual obligations and examination of contractual compliance is best done via which process?
• The total losses divided by the number of claims within a period defines which term?
• The best method of risk control is ______, or the elimination of risk.
• Which analysis step helps frame what to measure in quantitative risk assessment?
• An organization conducts a(n) _____ review to determine how well it complies with regulations and laws, which may be statutory, state, or federal.
• Speculative risk is associated with _____ or _____ risk.
• A ____ is a cause of loss.
• A situation, behavior, or condition that may lead to adverse financial consequences is called...
• Which term means a loss that is expected to continue occurring regularly?
• Which term refers to a situation with potential to cause adverse financial consequences to people or assets?
• ______ is the process of adjusting data to account for claim settlement lag, frequency development, IBNR, and inflation.
• Which term describes insurance carriers admitted and licensed by the state?
• The most obvious result of overlooking the Risk Identification step in the risk management process is an increased likelihood of which outcome?
• Historical examination of exposures and their valuations is known as which analysis?
• The reimbursement from an insurance carrier when an organization experiences a good year in terms of losses
• Lost data and disruption to service or online access are examples of risks in which general class of risk?
• A personal attribute that improves network collaboration is what?
• _______ is the implementation of a process intended to minimize the uncertainty of exposures that can adversely affect an individual's or an organization's assets and financial well-being.
• Trade agreements, legislation, and social unrest are examples of risks in which general class of risk?
• The shift of function, exposure, or responsibility of certain liabilities to another party.
• What is the term for the use of internal funds to pay losses?
• A(n) ____ takes contractual responsibility for financial consequences of a risk.
• Which of the following describes the process of reducing exposure to perils?
• Which type of analysis is most suitable when risk factors are intangible or not easily quantified, such as organizational culture or management commitment?
• Which term describes the practice of physically separating assets to prevent a single event from affecting all assets at once?
• Tornadoes that frequently occur within Tornado Alley represent which risk concept?
• What term is a cause of loss?
• ____ is a visual representation of complex sets of data interpretations that uses colors to indicate patterns or groupings of how risk will impact an organization.
• What is the primary purpose of using risk mapping and heat mapping in decision making?
• Monetary exchange rates, inflation rates, and import-export tariffs are examples of risks in which general class of risk?
• The creation of backups for critical systems is most accurately called
• A passenger enters an elevator. His clothing is caught in the elevator door as the door closes. The passenger snatches the clothing from the door before the elevator begins to move. He is uninjured and his clothes are not damaged.
• The process focused on listing exposures and perils the organization faces is known as risk identification.
• A driver is at fault in a minor auto accident. The other driver is uninjured, but the bumper on her car requires repairs. The other driver demands that the at-fault driver's insurance company pay for the loss.
• A risk manager who conducts a ____ analysis calculates the sum of all costs and expenses associated with risks and risk management within an organization.
• Insurance is a transfer of risk.
• Why is it beneficial for risk managers to involve both internal and external networks?
• Which term describes the portion of expected losses an organization will retain?
• ______ takes historical loss data and converts that loss data to current dollar amounts.
• Which term describes an actual loss event that results in damage or injury?
• A situation, practice, or condition that may lead to an insured's susceptibility to adverse financial consequences or loss is called a(n) _____.
• A fully insured program that transfers all risk of loss to an insurance company
• Which term is defined as a condition or characteristic that may increase the likelihood or severity of a loss?
• Pure risks include threats to property and people, as well as ___.
• Which term best describes the financing approach that emphasizes arranging funds to cover losses and may involve transferring risk to an insurer?
• A risk manager may define risk as the person or property exposed to a potential loss.
• Fire and water damage, earthquake damage, and bodily injury are examples of risks in which general class of risk?
• Which term describes using protective equipment to reduce the likelihood or severity of incidents?
• The events that cause loss, such as fire or flood, are known as which term?