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Key Facts: CRM56 Exam

Official Exam Questions

RIMS CRM Exam Information

100 min

Time Limit

RIMS (1 hour 40 minutes)

70%

Passing Score

RIMS

$205/$225

Exam Fee (Member/Non-member USD)

RIMS Exam Registration

Official Risk Financing Topic Areas

RIMS CRM Eligibility

Dec 15

Virtual Exam Access Deadline

RIMS (year of purchase)

CRM56 is a 70-question, 100-minute virtual RIMS exam on Risk Financing with a 70% pass mark. Fees are $205 USD for RIMS members and $225 USD for non-members. Content follows The Institutes CRM-56 Risk Financing (Edition 6) and the 11 official RIMS topic areas from introduction through capital-market transfer and cost allocation.

Sample CRM56 Practice Questions

Try these sample questions to test your CRM56 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1In CRM risk financing, which statement best defines risk financing?

A.A conscious decision that generates funds to offset cash-flow variability from risk outcomes

B.Any safety program that reduces the frequency of workplace injuries

C.The process of identifying only speculative investment risks

D.A requirement to purchase guaranteed-cost insurance for every exposure

Explanation: Risk financing is a conscious act or decision not to act that generates funds to pay for the cash-flow variability that may result from risk. It focuses on funding losses and related costs, not on loss prevention techniques alone.

2Which pair best distinguishes risk financing objectives from risk control objectives?

A.Risk financing eliminates all risk; risk control only buys insurance

B.Risk financing funds losses; risk control reduces loss frequency or severity

C.Risk financing is limited to captives; risk control is limited to deductibles

D.Risk financing measures hazards; risk control allocates premiums only

Explanation: Risk control techniques reduce the frequency or severity of losses. Risk financing techniques arrange how the organization will pay for losses that still occur. Both support overall risk management objectives but serve different roles.

3Which risk financing technique involves paying losses from the organization's own resources without transferring the risk to an insurer?

A.Guaranteed-cost insurance

B.Catastrophe bond transfer

C.Retention

D.Facultative reinsurance

Explanation: Retention means the organization keeps responsibility for funding all or part of losses from its own resources (cash, reserves, or borrowing). Insurance and capital-market products transfer some or all of that funding obligation to others.

4When selecting among risk financing techniques, which criterion is most central to CRM56?

A.Whether the technique maximizes broker commission regardless of funding adequacy

B.Whether competitors use the same broker for all lines

C.Whether the technique eliminates the need for any loss records

D.Ability to meet post-loss funding needs at an acceptable cost and cash-flow impact

Explanation: Risk financing selection weighs how well a technique funds losses when they occur, at what cost, and with what effect on liquidity, earnings volatility, and risk appetite. Marketing convenience and broker uniformity are secondary operational choices, not core financing criteria.

5Which statement correctly describes a guaranteed-cost insurance plan as a risk financing technique?

A.Premium is largely fixed for the policy period; the insurer funds covered losses subject to policy terms

B.Premium equals actual losses plus a fixed expense load with no transfer of risk

C.The insured pays only losses above an attachment point with no premium

D.All losses are paid from a captive with no commercial insurer involvement

Explanation: Under a guaranteed-cost plan, the insured pays a predetermined premium (subject to audit adjustments on some exposures) and the insurer pays covered losses according to the policy. The primary risk transfer is to the insurer.

6Which financing approach typically keeps more loss volatility on the organization's balance sheet?

A.Low-deductible guaranteed-cost coverage for the same exposure

B.High retention with limited insurance above a large deductible

C.Fully insured first-dollar coverage with no deductible

D.Quota-share reinsurance purchased by a primary insurer unrelated to the organization

Explanation: A high retention leaves more frequency and severity of losses with the organization until the insurance attachment is reached, increasing earnings and cash-flow volatility relative to low-deductible or first-dollar insurance.

7A risk financing plan should be monitored after implementation primarily to determine whether:

A.Named-insured mailing addresses match the latest corporate letterhead

B.Brokers have replaced all policy forms with manuscript wordings annually

C.Actual loss funding needs, costs, and cash-flow effects still match the plan's objectives

D.Every department has purchased a separate captive

Explanation: Monitoring compares results—losses, premiums, collateral, cash flow, and coverage gaps—against financing objectives so the organization can adjust retention, limits, or techniques. Cosmetic or structural extras are not the monitoring purpose.

8Which mix best illustrates a blended risk financing program?

A.Only first-dollar guaranteed-cost policies for every exposure with no deductible

B.Only unfunded pay-as-you-go payments with no insurance or reserves

C.Only catastrophe bonds with no commercial insurance or retention

D.A large deductible primary layer plus excess insurance and a captive for selected retentions

Explanation: Blended programs combine retention, insurance, and sometimes captives or capital-market tools across layers. Using deductibles, excess insurance, and a captive together is a common blended structure.

9Which organizational constraint most directly limits how much risk an organization can retain?

A.Liquidity, capital, and tolerance for earnings volatility

B.The number of certificates of insurance issued last year

C.Whether invoices are paid monthly or quarterly

D.The length of the risk management policy manual

Explanation: Retention capacity is constrained by cash and credit available to pay losses, capital requirements, rating-agency and covenant limits, and management's tolerance for earnings swings. Administrative preferences do not set retention capacity.

10Expected loss for a homogeneous exposure unit is most commonly estimated as:

A.Maximum possible loss divided by premium

B.Loss frequency multiplied by average severity

C.Policy limit minus deductible

D.Premium minus underwriting expense only

Explanation: Expected loss equals expected frequency times expected severity for the exposure. That product is the statistical center of the loss distribution used in retention and pricing decisions.

About the CRM56 Exam

CRM56 Risk Financing is the third standardized exam for the Canadian Risk Management (CRM) designation awarded by RIMS. It tests selection, implementation, and monitoring of techniques that fund accidental losses—including insurance transfer, self-insurance, retrospective rating, reinsurance, captives, contractual transfer, financial hedges, capital-market ILS, and cost allocation.

Assessment

Two virtual sections: 50 MCQs then 20 MCQs on The Institutes LMS

Time Limit

100 minutes (1 hour 40 minutes)

Passing Score

70%

Exam Fee

$205 USD (RIMS member) / $225 USD (non-member) (RIMS / GRMI (virtual via The Institutes LMS))

CRM56 Exam Content Outline

~9%

Introduction to Risk Financing

Objectives, retention versus transfer, guaranteed-cost plans, blended structures, and monitoring.

~9%

Estimating Hazard Risk

Frequency/severity, trending, development, PML/MPL, and credibility.

~10%

Transferring Hazard Risk Through Insurance

Deductibles/SIRs, triggers, excess limits, coinsurance, and gaps.

~9%

Self-Insurance Plans

Planned retention, stop-loss, security, and claims administration.

~9%

Retrospective Rating Plans

Loss-sensitive premium, min/max, paid versus incurred retros.

~9%

Reinsurance

Treaty/facultative, proportional and XOL, clash, and finite risk.

~9%

Captive Insurance

Pure/group captives, fronting, domiciles, and capitalization.

~9%

Contractual Risk Transfer

Indemnities, AI/waivers, anti-indemnity laws, and certificates.

~9%

Transferring Financial Risk

FX, rates, commodities, credit hedges, and basis risk.

~9%

Capital Markets Hazard Transfer

Cat bonds, parametric/indemnity triggers, ILWs, and sidecars.

~9%

Allocating Hazard Risk Costs

Exposure-based charges, loss incentives, and cost of capital.

How to Pass the CRM56 Exam

What You Need to Know

Passing score: 70%
Assessment: Two virtual sections: 50 MCQs then 20 MCQs on The Institutes LMS
Time limit: 100 minutes (1 hour 40 minutes)
Exam fee: $205 USD (RIMS member) / $225 USD (non-member)

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

CRM56 Study Tips from Top Performers

1Study The Institutes CRM-56 Risk Financing (Edition 6) chapter order—it matches the RIMS topic list

2Be fluent in deductible vs SIR, specific vs aggregate stop-loss, and paid-loss vs incurred-loss retros

3Compare proportional reinsurance (quota share) with excess-of-loss attachment mechanics

4Know captive fronting, domicile drivers, and why capital/collateral matter

5For ILS, distinguish indemnity, parametric, and industry-loss triggers—and the basis risk tradeoff

6Practice expected-loss calculations (exposures × frequency × severity) under timed conditions

Frequently Asked Questions

What is the CRM56 exam?

CRM56 is the RIMS Canadian Risk Management standardized exam covering Risk Financing. Together with CRM54 and CRM55, it is required to earn the CRM designation after completing approved foundational courses.

How many questions and how much time do I get?

The official exam has 70 multiple-choice questions in 1 hour 40 minutes, split into a 50-question section and a 20-question section on The Institutes virtual LMS.

What score do I need to pass CRM56?

You need 70% or higher. Pass/fail is shown immediately when you finish the virtual exam.

How much does the CRM56 exam cost?

RIMS lists $205 USD for members and $225 USD for non-members per CRM exam. Course tuition at an approved provider is separate. After all three exams, RIMS invoices a $125 USD designation registration fee.

What topics appear on CRM56?

Official RIMS topics include introduction to risk financing; estimating hazard risk; transferring hazard risk through insurance; self-insurance; retrospective rating; reinsurance; captives; contractual risk transfer; transferring financial risk; transferring hazard risk to capital markets; and allocating costs of managing hazard risk.

Is this the same as 'Risk Control'?

No. The exam ID ca-crm-control is historical naming; the official CRM56 title and syllabus are Risk Financing. Risk Assessment and Treatment is CRM55 (ca-crm-analysis).