CRM-Risk

A new risk manager at a regional food distributor is meeting department heads to compile a list of warehouses, vehicle fleets, contracts, and employee travel exposures before choosing any treatment techniques. Which step of the risk management process is she performing?

• ARisk identification
• BRisk financing
• CClaims administration
• DPerformance auditing

Open solvent containers are left near a paint line, increasing the chance that a small spark turns into a fire. In this scenario, the open containers are best described as what?

• AA physical hazard
• BA peril
• CA loss
• DA morale hazard

A design firm relies heavily on one lead engineer whose departure would delay projects and client deliverables. Which exposure classification is most relevant?

• AProperty exposure
• BPersonnel exposure
• CCrime exposure
• DAutomobile exposure

During an annual renewal review, a risk manager asks each department leader structured questions from a standard list about property, liability, and operational changes. Which identification method is being used?

• AChecklist or questionnaire
• BFault tree analysis
• CPremium audit
• DRetrospective rating

A manufacturer wants to trace how a breakdown at one machine can stop packaging, shipping, and customer billing. Which analytic identification method is most useful?

• AA flowchart of the production process
• BA dividend plan analysis
• CAn actuarial credibility test
• DA benchmark of stock price volatility

While reviewing the income statement, a risk manager notices that one product line contributes 70% of the company's gross margin. What exposure does this most clearly highlight?

• AHeavy business income dependence on one revenue source
• BHidden morale hazard among supervisors
• CWorkers compensation reserve redundancy
• DLower tax liability

The board sets a limit that earnings from commodity trading cannot reduce annual EBITDA by more than 5%. In enterprise risk management terms, this is best described as what?

• ARisk tolerance
• BLoss prevention
• CHazard identification
• DClaims adjustment authority

After acquiring three clinics, the risk manager first maps who can approve contracts, hire staff, and report incidents at each site. Which principle is she addressing?

• ASelecting retrospective rating
• BCalculating claim triangles
• CUnderstanding organizational context
• DArranging salvage recovery

A company uses supplier-site maps to show single-source raw materials, transportation chokepoints, and backup facility locations across its network. Which exposure is this analytic approach best at uncovering?

• AContingent business interruption from supply-chain dependency
• BEmployee dishonesty loss frequency
• CPersonal auto liability of visitors
• DClerical errors in payroll taxes

A CFO says foreign exchange swings are part of pursuing growth, while warehouse fires are not. Which statement correctly classifies these exposures?

• ACurrency swings are speculative risk and fires are pure risk
• BBoth are pure risks
• CCurrency swings are hazard losses and fires are speculative risks
• DBoth are morale hazards

A retailer reviews five years of slip-and-fall data and sees many minor medical-only claims but almost no catastrophic ones. Which frequency-severity pattern best describes the exposure?

• AHigh frequency and low severity
• BLow frequency and low severity
• CLow frequency and high severity
• DHigh frequency and high severity

A nonprofit has limited loss data for volunteer activities, so the risk manager ranks exposures as low, medium, or high using supervisor judgment. What kind of analysis is this?

• AQualitative analysis
• BStochastic reserving
• CRetrospective rating
• DDiscounted cash flow analysis

On a risk map, which exposure usually deserves the most immediate attention?

• AHigh likelihood and high impact
• BLow likelihood and low impact
• CLow likelihood and moderate impact
• DHigh likelihood and minimal impact

Two plants each have expected annual machinery losses of $200,000. Plant A's losses are tightly clustered around that amount, while Plant B occasionally has very large spikes. What metric distinguishes Plant B as more volatile?

• AHigher variance around expected loss
• BLower maximum possible loss
• CSmaller median loss
• DStronger contractual transfer

A risk manager is projecting next year's auto liability losses. Claim severity has been trending up 6% annually and the fleet will grow 10% in miles driven. Which adjustment is most appropriate?

• ATrend losses for severity and exposure growth before forecasting
• BUse only last year's total because it is most recent
• CIgnore mileage because claim counts drive all cost changes
• DReduce projected losses because more vehicles diversify the risk

A company expects to pay a retained liability claim of $250,000 three years from now. If the discount rate is 5% annually, what is the approximate present value?

• A$216,000
• B$225,000
• C$238,000
• D$263,000

Division A and Division B each have expected annual loss of $500,000. Division A's standard deviation is $75,000 and Division B's is $250,000. Which statement is best?

• ADivision B is less predictable and may need more risk financing capacity
• BDivision A has higher expected loss
• CBoth divisions are equally volatile
• DDivision B should automatically retain more risk

A warehouse can install rack-protection barriers for $40,000. The change is expected to reduce annual forklift damage from $70,000 to $20,000 over the next year. Ignoring time value, what is the net economic benefit of the control for that year?

• A$10,000
• B$20,000
• C$30,000
• D$50,000

A firm is considering a sensor system that costs $120,000 today and is expected to reduce losses by $50,000 at the end of each of the next 3 years. At 6%, what is the approximate net present value?

• A$13,652
• B-$6,348
• C$30,000
• D$150,000

Last year a distributor had 40 workers compensation claims averaging $8,000 each. For next year, payroll exposure is expected to rise 5% and claim severity trend 7%, with claim frequency unchanged. What is the best estimate of next year's total losses?

• A$342,400
• B$359,520
• C$384,000
• D$399,600

After repeated back strains in a fulfillment center, management installs adjustable workstations and lift assists. Which risk control objective is most directly targeted?

• APreventing employee injuries before they occur
• BTransferring claims to the insurer
• CIncreasing claim deductibles
• DFinancing reserve volatility

A landlord requires a snow-removal vendor to indemnify the property owner and name it as an additional insured. Which control technique is being used?

• AContractual transfer
• BRisk avoidance
• CClaims auditing
• DRetention

A hospital's disaster plan names backup command staff, alternate care sites, and redundant communications. What is the main purpose of these provisions?

• AMaintain operations during and after a crisis
• BEliminate all patient-safety risk
• CGuarantee insurance recovery
• DReduce retro premium factors

A distribution company allows newly hired drivers on the road before checking motor vehicle records. Which HR control would best reduce fleet loss frequency?

• AVerify driving records before assignment
• BRaise cargo deductibles
• CDelay accident reporting by supervisors
• DBuy a dividend plan

A plant stores flammable liquids in ordinary cabinets near ignition sources. Which property-liability control would best reduce fire severity?

• AMove materials to approved flammable-storage cabinets away from ignition sources
• BAdd a larger deductible
• CStop keeping incident logs
• DUse a looser vendor contract

An employer notices that workers compensation claims become much more expensive when supervisors wait a week to report injuries. Which claims-management practice addresses this?

• APrompt first notice of loss and early claim triage
• BBroader hold-harmless wording
• CRemoving return-to-work options
• DEliminating supervisor training

A resort is considering whether to continue offering guest fireworks launches after several near misses. If management decides to stop the activity entirely, which control technique is it using?

• AAvoidance or elimination
• BReduction
• CDiversification
• DPooling

A midsize law firm experiences repeated phishing attempts against remote staff. Which control is most likely to reduce credential-compromise losses?

• AMulti-factor authentication and phishing awareness training
• BHigher property limits
• CA lower self-insured retention
• DLarger legal reserves

A contractor agrees to indemnify a project owner for jobsite injuries, but the contractor has weak finances and no additional insured endorsement in place. What is the biggest residual risk for the owner?

• AThe transfer may fail if the contractor cannot fund the obligation
• BThe owner automatically becomes the workers compensation insurer
• CThe indemnity eliminates all litigation risk
• DThe owner can ignore certificate tracking

A manufacturer has a thick disaster manual, but plant managers have never practiced alternate-supplier sourcing or crisis communications. Which weakness is most serious?

• AThe plan is untested and may fail during an actual disruption
• BThe plan contains too many phone numbers
• CThe insurer will always replace lost customers
• DThe company should avoid all production risk instead

A firm with predictable small losses chooses a $100,000 deductible to lower premium. What financing change has it made?

• AIncreased retention
• BEliminated exposure
• COutsourced claims
• DCreated a captive

A buyer wants stable budgeting and does not want premiums to change with actual losses during the policy period. Which option fits best?

• AGuaranteed cost program
• BRetrospective rating plan
• CLarge deductible reimbursement plan
• DSelf-insured retention only

A manufacturer sells a division but keeps responsibility for losses arising from products shipped before the sale date. This arrangement is best described as which financing issue?

• ANoninsurance transfer allocated by contract in the transaction
• BDividend rating
• CRisk mapping
• DErgonomic control

An insured under a participating policy may receive money back if losses and expenses are favorable, but the return is not guaranteed in advance. This feature describes what?

• ADividend plan
• BRetrospective rating
• CGuaranteed cost premium
• DSelf-insured retention

A regional trucking company joins other similar firms to insure retained layers through an entity they collectively own. What type of arrangement is this?

• AGroup captive
• BDividend plan
• CSurety bond
• DRetrospective tax multiplier

A company is deciding whether to insure or retain an exposure. Which exposure is usually most appropriate for traditional insurance?

• ALow-frequency, high-severity loss
• BHigh-frequency, low-severity office supply loss
• CRoutine maintenance expense
• DMinor loss inside a funded deductible

A risk manager wants to compare a $50,000 deductible versus a $250,000 deductible over three years. Why is present value important in the analysis?

• ABecause retained losses and premium savings occur at different times and should be valued…
• BBecause present value eliminates uncertainty
• CBecause insurers price only on nominal dollars
• DBecause deductible decisions do not affect cash flow timing

The CFO wants to change the casualty program from guaranteed cost to a large-deductible structure. Who should be involved because the decision affects collateral, cash flow, claims handling, and operations?

• AA cross-functional financing team including finance, treasury, risk management, and opera…
• BOnly the insurance broker
• COnly outside counsel
• DOnly the payroll department

Under a retrospective rating formula, premium equals (converted losses plus basic premium) multiplied by the tax multiplier. If converted losses are $480,000, basic premium is $120,000, and the tax multiplier is 1.05, what is the retrospective premium before minimum or maximum adjustments?

• A$600,000
• B$612,000
• C$630,000
• D$651,000

A company compares a guaranteed cost quote of $1,050,000 with a loss-sensitive option having an expected cost of $940,000 but possible outcomes ranging from $700,000 to $1,400,000. If liquidity is tight and earnings volatility must stay low, which choice is more defensible?

• AGuaranteed cost program
• BLoss-sensitive option because its expected cost is lower
• CSelf-insure the entire layer
• DGroup captive immediately

A department head says the risk manager should personally own every operational risk in the company. What is the best response?

• AThe risk manager coordinates the process, but risk ownership stays with line management
• BThe risk manager becomes the legal owner of all losses
• COnly the broker owns risk decisions
• DThe finance team alone handles operational risk

A risk manager wants better contract review before vendors start work. Which part of the risk management network should be engaged first?

• AProcurement and legal
• BCafeteria staff
• CExternal auditors only
• DShareholders directly

A claims dashboard that pulls incident counts, open claim age, and loss trends from one system mainly improves what capability?

• ATimely risk information for decision-making
• BElimination of all data errors
• CTransfer of risk to insurers
• DReplacement of supervisory judgment

When calculating total cost of risk, which item should be included along with insurance premiums?

• ARetained losses and administrative costs
• BOnly broker commissions
• COnly property values
• DOnly shareholder dividends

During acquisition due diligence, which document set is most useful for uncovering hidden casualty problems?

• ALoss runs, open claim listings, and major contract indemnity terms
• BThe target's office seating chart
• COnly marketing brochures
• DOnly the annual holiday calendar

After a contamination rumor spreads online, a food brand loses major retail shelf space even though property damage is minor. What kind of exposure is most evident?

• AIntangible asset and reputational risk
• BSolely property damage risk
• COnly workers compensation risk
• DPurely salvage recovery risk

Shareholders sue directors after an earnings restatement, alleging misleading disclosures. This is primarily what kind of risk?

• AExecutive liability exposure
• BInland marine exposure
• CCrime severity trend
• DFleet telematics risk