SM-065 Test Review

The term risk is used in business to refer to the

• mistakes that employees make.

• possibility of loss or gain.

• chances that consumers take.

• uncontrollable possibility of danger.

An earthquake is an example of a __________ risk.

• speculative

• pure

• operational

• strategic

What do risk managers need to do to help their company successfully launch a new product?

• Develop fail-proof risk-management strategies

• Ignore risks the company has encountered in the past

• Evaluate the potential gains and losses of the launch

• Act quickly to beat the company’s competition

Which of the following is an example of hazard risk:

• Tornados

• Competition

• Inflation

• Product shortages

An example of an internal financial risk is

• foreign exchange rate changes.

• consumer buying power.

• credit downgrades.

• improper budgeting practices.

Poor product development, unreliable manufacturing equipment, and product shortages are examples of __________ risks.

• hazard

• financial

• operational

• strategic

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

• Hazard

• Financial

• Operational

• Strategic

Businesses are most likely to prepare contingency and fallback plans for risks that they choose to

• avoid.

• transfer.

• mitigate.

• accept.

Technological innovations can increase strategic risk for business by

• making some products obsolete.

• causing interest rate increases.

• eliminating the convenience of buying in person.

• decreasing the supply of people seeking employment.

A good source of information about a business’s retroactive risks would be a(n)

• environmental scan.

• business incident log.

• local weather forecast.

• purchasing manager.