CISR RISK MANAGEMENT EXAM 2023-2024 ACTUAL EXAM 150 QUESTIOS AND CORECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) |AGRADE

CISR RISK MANAGEMENT EXAM 2023-2024 ACTUAL

EXAM 150 QUESTIOS AND CORECT DETAILED

ANSWERS WITH RATIONALES (VERIFIED ANSWERS)

|AGRADE

Risk Financing - ANSWER- The acquisition of internal and external

funds to pay losses at the most favorable cost.

Risk Financing Techniques - ANSWER- Risk Taking appetite, transfer

options, simple transfer options & loss sensitive transfer options

Risk Administration - ANSWER- the process of planning,

implementing, and monitoring the risk management program

Risk Management Information System - ANSWER- an information

system that supports both the risk team and the organization. This type

of software deploys risk management tools in addition to managing risk

data. RMIS can sometimes serve as a customer relationship module, as

well.

Four Components of the Total Cost of Risk - ANSWER- Insurance

Costs, Retained losses & ALAE, Risk Management departmental costs

and Outside service fees

Pure Risk - ANSWER- A chance of loss or no loss, but no chance of

gain.

Speculative Risk - ANSWER- Chance of loss or gain, usually associated

with business or financial risk.

Exposure - ANSWER- a situation, practice, or condition that may lead to

an adverse financial consequence; an activity or asset.

Hazard - ANSWER- a condition that may give rise to a loss from a

given peril; physical, moral, or morale characteristics that increases the

likelihood of a loss.

Peril - ANSWER- the cause of loss, such as fire, wind, hail, slip and fall,

etc.

Severity - ANSWER- the dollar amount of a given loss or the aggregate

dollar amount of all losses for a given period.

Accidents are also evaluated according to how severe the ensuing injury

or property damage may be.

Frequency - ANSWER- the number of losses occurring in a given time

period. Accidents are evaluated according to how often they might

occur.

Incident - ANSWER- an event that disrupts normal activities and may

become a loss (also referred to as a near miss)

Accident - ANSWER- an unplanned event definite as to time and place

that results in injury or damage to a person or property

Occurrence - ANSWER- an accident with the limitation of time

removed (an "accident" that is extended over a period of time rather than

a single observable happening)

Loss - ANSWER- a reduction in the value of assets. Not all losses

become claims

Claim - ANSWER- a demand for payment or an obligation to pay as a

result of a loss

Incurred but not reported (IBNR) - ANSWER- a reserve that must be

established for claims that have already occurred but that have not yet

been reported

Which of the following is not one of the components in the definition of

risk? - ANSWER- Chance or probability of loss

Certainty concerning a loss

Possibility of a variation of outcomes from a given set of circumstances

Difference between expected losses and actual losses

Loss Trending - ANSWER- adjusting historical losses to account for

inflationary trends so that the ultimate value is more current or

meaningful. Loss trend factors are multiplied by actual historical losses

to trend the losses

Loss Development - ANSWER- the difference between the value of a

loss as originally reported and its subsequent evaluation at a later date or

at the time of its final disposition

Expected Losses - ANSWER- Loss projections ("loss pics" or "loss

picks") based on probability distributions and statistics, frequently

developed using actuarial techniques including trending and

development.

Avoidance - ANSWER- eliminating an activity or exposure which

eliminates chance of loss

Prevention - ANSWER- breaks sequence of events that leads to a loss or

that makes the event less likely

Reduction - ANSWER- reducing the severity or financial impact from

unpreventable losses