Chapter 12 - Risk Management

Credit card fraud is an example of:

• artificial risk

• natural risk

• human risk

• economic risk

Risk management is taking action to prevent or reduce the possibility of loss to your business.

• true

• false

Which of the following is NOT one of the basic strategies for dealing with risk?

• avoid the risk

• assume the risk

• deny the risk exists

• transfer the risk to another party

It is not possible for a business to avoid all risks.

• true

• false

Business owner's policies do not cover auto insurance, workers' compensation, or health and disability insurance.

• true

• false

A business owner should not let managers and employees know about the company's plan for handling risks, as that information is not really any of their concern.

• true

• false

The insurance agent who sells you the policy will be involved in processing your claim should you ever need to collect on your policy.

• true

• false

All of the following are steps that should be taken in a risk assessment EXCEPT:

• assume that risks are not a threat to your business until you are faced with them

• decide how certain risks would affect your business

• prioritize risks by the impact they will have on your business

• educate yourself about the risks common to your type of business

A machine called an electronic credit authorizer

• calculates the credit worthiness of a potential customer

• checks to see if a customer has enough money in his/her checking account to cover a purchase

• checks to see if a customer's credit card is valid

• generates a summary of a customer's credit report

Some businesses, such as restaurants and retail stores, are more vulnerable to employee theft than others.

• true

• false