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Exam 23: Managing Risk

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Question 41

Multiple Choice

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Enterprise risk management is

A) important to business.
B) irrelevant to business.
C) only used by nonprofit organizations.
D) only used by the Department of Homeland Security.

E) B) and C)
F) All of the above

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Question 42

Multiple Choice

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________ is a term that refers to the chance of loss, the degree of probability of loss, and the amount of possible loss.

A) Speculation
B) Hazard
C) Insurability
D) Risk

E) B) and D)
F) B) and C)

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Question 43

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The chance of a fire is an example of a pure risk.

An enterprise risk management (ERM) program has a goal of defining which risks the program will manage.

An example of an uninsurable risk would be the potential losses suffered by Patrick's Pizza Pies resulting from a popular new product from Paulie's Pizza Palace.

Property insurance covers losses from fires, accidents, or theft.

Which of the following is a goal of enterprise risk management?

The risk of environmental harm is ________ in its proportions on issues such as global warming.

An endorsement can provide additional coverage to a homeowner's policy for business equipment.

SpeedyTime Delivery requires their drivers to wear seat belts as they operate their trucks. This is an example of self-insuring as a risk management strategy.

According to the rule of indemnity, an insured person cannot collect more than the actual loss from an insurable risk.

Apple has an insurable interest in the lives of its top executives.

The type of risk that is of most concern to businesspeople is speculative risk.

A characteristic of a health savings account that distinguishes it from other types of health care coverage is that it

Explain the benefits of workers' compensation. Who is required to carry this type of insurance?

Erin received a letter from her employer's insurance company inquiring if her children had health insurance coverage from another provider. According to the ________, the insurance provider has the right to this information.

An insurance company can use the law of large numbers to predict the number of people in your community that will have a car accident in a given month.

Robert, owner and operator of a local nursing home, is designing an addition. Though, he realized that water sprinklers and smoke detectors were now required by state regulations, it was not a problem for him. His existing structure already had sprinklers and detectors because he felt that this was an effective strategy to

The Pension Benefit Guaranty Corporation provides retirement benefits, life insurance, health insurance, and disability income insurance.

The ________ says that an insured person cannot collect more than the actual loss from an insurable risk.