30 Questions
What is a situation called where an outcome is sure to happen?
Certainty
What is the condition where a potential loss may or may not occur?
Loss Exposure
What is the term for a reduction in value that can be measured in monetary terms?
Loss
What is an example of an indirect loss?
Loss of revenue due to the cancellation of orders
What is the definition of risk?
An encounter with uncertainty and probable loss
What is an example of direct loss?
Damage to the building
What type of risk involves a gain as one of the possible outcomes?
Speculative risk
Which of the following types of risk is not a type of personal risk?
Non-diversifiable risk
What is the consequence of a person experiencing the risk of premature death?
The family may be left with certain financial responsibilities
What is the primary difference between pure risks and speculative risks?
The possibility of gain or loss
What type of risk is characterized by a possibility of minor ailments, such as a fever or cold?
Risk of poor health
What is the primary impact of income risk on an individual's finances?
A reduction in personal finances
What is the consequence of a factory's inability to operate as usual?
Disruption in production, sales, and normal profits
What is the peril in a situation where a fireman sustains burns while on duty?
The fire that caused the burns
What is an example of a physical hazard?
Worn out tires on a car
What is an example of a moral hazard?
Faking death to claim life insurance
What is another term for morale hazard?
Morale hazard is also known as attitudinal hazard
What is an example of a morale hazard?
Leaving the front door unlocked while no one is at home
What is the primary consequence of a firm being sued by a third party due to liability risk?
Substantial reduction in the value of the firm
Which of the following is an example of a loss of business income risk?
A fire in the plant of a manufacturing firm
What is the term for the risk of injury or illness to employees or death or disability to a key person in a business?
Human resource risk
Which of the following is an example of crime risk?
Theft by an employee
What is the primary consequence of a firm shutting down its operations due to property damage?
Decline in sales and loss of market share
Which of the following is a risk that can result in a decline in sales and loss of income?
Loss of business income risk
What is a risk that arises when a person lives longer than expected and faces financial difficulties in their old age?
Risk of Longevity
What type of risk arises from a firm's ownership of physical assets such as office buildings, plants, and machinery?
Property risk
What is the term for the risk of being sued by another person due to one's own negligence?
Liability risk
What type of losses are related to the cost of removing the ruins of a damaged house and its reconstruction?
Indirect losses
What happens to firms during a recession?
They take drastic measures by laying off some of their employees
What type of risk affects firms and causes a reduction in the firm's value?
Business risk
Test your knowledge on the basics of risk, including certainty and uncertainty, classification of risks, and attitudes towards risk. Learn about the risks faced by individuals and businesses. Based on Mahdzan & Boey 2015.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
