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1
Which of the following is a goal of enterprise risk management?
A)defining which risks the program will manage
B)deciding how to petition the Department of Homeland Security for financial help
C)assigning risk management to a lobbyist in Washington
D)refining the business plan for risk management
2
________ risk involves a chance of either profit or loss.
A)Insurable
B)Indemnified
C)Speculative
D)Pure
3
In designing an addition to his successful bed and breakfast, Harold realized that water sprinklers and smoke detectors were now required by state regulations. His existing structure already had sprinklers and detectors because he felt that this was an effective strategy to:
A)self-insure against the risk of fire loss.
B)minimize the speculative risk of a fire.
C)reduce the risk of a fire loss.
D)avoid the risk of a fire loss.
4
Amusement parks often have a minimum height restriction on some of their most thrilling rides. This risk management strategy is done in an effort to:
A)minimize the speculative risk associated with an injury.
B)reduce the risk associated with a potential accident.
C)self-insure against a speculative accident.
D)create the perception of a more exciting ride.
5
One guideline to determine that a risk is generally insurable is:
A)the loss is measurable.
B)the loss is due to a price change.
C)the loss is speculative.
D)it is due to operational issues such as a strike.
6
Hamford Corporation is a mutual insurance company. The company has had a bad year, with the amount of claims exceeding the amount of premiums by a significant amount. This is likely to result in a(n):
A)larger dividend for its stockholders.
B)investigation by the Federal Insurance Commission.
C)increase in premiums or a reduced dividend payment to policyholders.
D)exception to the law of large numbers.
7
In order to save money, health maintenance organizations (HMOs) usually require their members to:
A)enroll in a stress reduction and management class.
B)obtain the HMO's approval before medical treatment is provided.
C)quit smoking and exercise regularly to obtain coverage.
D)pay a small deductible before the HMO will pay any bills.
8
One benefit of Preferred Provider Organizations (PPOs) compared to Health Maintenance Organizations (HMOs) is that PPOs:
A)offer lower costs for members.
B)give members an individual spending account to use for health care costs.
C)allow members to choose their own physicians.
D)always pay 100 percent of the authorized cost of treatment.
9
__________ insurance provides benefits to the survivors of workers who die as a result of work-related injuries.
A)Product liability
B)Professional liability
C)Workers' compensation
D)Malpractice
10
Risk management now means the evaluation of:
A)worldwide risks such as global warming.
B)worldwide issues such as disease.
C)European issues such as the value of the euro.
D)political risks in South America.





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