18 Questions
Which type of risk is characterized by a potential gain as one of the outcomes?
Speculative risk
What type of risk is associated with a person's income being reduced or additional expenses being incurred?
Personal risk
Which of the following risks is an example of a more serious risk that could lead to permanent disability or death?
Risk of illness
What type of risk is characterized by a loss of income due to the death of a breadwinner?
Risk of premature death
Which of the following risks is not a type of personal risk?
Non-diversifiable risk
Which of the following risks is an example of a risk that can be mitigated through insurance?
Risk of premature death
What is the primary consequence of a firm experiencing losses due to any of the identified perils?
A substantial reduction in the value of the firm
What is the term for the risk of a firm being sued by a third party?
Liability risk
Which type of risk is illustrated in the example of a customer slipping and falling in a business premises?
Liability risk
What is the primary consequence of a manufacturing firm experiencing a fire in its plant?
A decline in sales and loss of market share
What is the term for the risk of injury or illness to employees or death or disability to key persons in a business?
Human resource risk
Which type of risk is illustrated in the example of theft by employees or misuse of company funds by owners or employees?
Crime risk
What is the main consequence of a factory's inability to operate as usual?
Disruption in production, sales and normal profits
What is the peril in the case of a fireman sustaining burns while on duty?
The fire that caused the burns
What type of hazard is a worn out tire on a car?
Physical hazard
What is an example of moral hazard?
Faking death to claim from life insurance
What is the primary goal of loss prevention?
To eliminate the risk of a loss
What type of hazard is an individual's careless attitude that increases the severity or frequency of a loss?
Morale hazard
Understand the concept of insurable risks and how they are classified into pure and speculative risks. Learn about the characteristics of non-diversifiable risks and how they affect individuals and businesses. Test your knowledge of risk management and insurance principles.
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