16 Questions
Which of the following is NOT a financial risk that may be faced by a business organization?
Injuries suffered by employees at the workplace
What type of risk does Mid-States Beef face if it is concerned about the price of corn increasing significantly?
Commodity price risk
In an enterprise risk management program, the risk associated with an organization's property, liability, and personnel-related loss exposures is called
Financial risk
What is the operational risk associated with deviations from the organization's regular practices and procedures called?
Process risk
Which statement is true with respect to enterprise risk management programs?
Both I and II
If a business wants to hedge against adverse movements in foreign exchange rates, it would be primarily concerned with mitigating which type of risk?
Currency exchange rate risk
Which of the following statements is true regarding the insurance market conditions and underwriting results?
Insurance rates are high and underwriting standards are tight when the insurance market is "hard."
What is the probability that any vehicle will be damaged in any given year if 50 out of 200 vehicles experience property damage on average each year?
20 percent
What is the repetitive pattern characterized by loose underwriting standards with low premiums followed by tight underwriting standards with high premiums in the property and liability insurance industry called?
Underwriting cycle
What is a comprehensive risk management program that addresses all of an organization's risks, including hazard risks, financial risks, strategic risks, and operational risks called?
Enterprise risk management plan
What is the chart prepared by Jessica, the risk manager, that lists all risks along with pertinent information about each risk called?
Risk register
What is the relative level of surplus in the insurance industry called?
Capacity
When are insurance market premiums high according to the text?
"Hard" insurance market
"Hard" insurance market is characterized by which of the following conditions?
"Hard" underwriting standards and high premiums
"Soft" insurance market is characterized by which of the following conditions?
"Soft" underwriting standards and low premiums
"Soft" insurance market uses more retention than in a "hard" insurance market. True or False?
"True"
Test your knowledge of financial risks faced by business organizations with this quiz. Explore scenarios involving injuries, fire losses, product liability, and currency exchange rate risks.
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