Risk Management

The term risk is used in business to refer to the

• mistakes that employees make

• chances that consumers take

• possibility of loss or gain

• uncontrollable possibility of danger

Which of the following is an example of hazard risk:

• inflation

• product shortages

• competition

• tornados

What category of risk typically has the most impact on business's ability to reach its goals and objectives

• hazard

• financial

• strategic

• operational

Which of the following statements accurately explains the nature of prospective risks:

• they have not happened before but could occur in the future

• they have occurred in the past and could occur again in the future

• they are usually easier to identify than retroactive risks

• they are typically more common than retroactive risks

The two dimensions of risk are

• mitigation and acceptance

• probability and impact

• probability and avoidance

• impact and avoidance

A common transference device is a(n)

• smoke alarm

• contingency plan

• insurance policy

• risk checklist

Businesses typically accept a risk's consequences if

• there is a clear way to avoid the risk

• there is absolutely no chance of loss

• the potential payoff is higher than the losses

• the potential payoff is guaranteed

Walt's World of Winter ski shop manages existing risk as appropriate, but it does not take risks on new products, new markets, or new equipment. Walt's is a risk-__ organization.

• averse

• tolerant

• seeking

• speculative

When monitoring and controlling risk, businesses must

• implement control processes before measuring new risks

• increase the probability that existing risk will result in loss

• increase the impact of existing risks

• consider new as well as existing risks

If a business chooses not to do something that it considers risky, it is __ the risk

• transferring

• avoiding

• mitigating

• accepting