PRII Ch 29

Of the following risk management strategies, the one that aims at minimizing both the severity and the likelihood of loss is (29)

• avoidance.
• reduction
• transference.
• retention.

Insurance is a method of

• risk elimination.

• risk mitigation

• risk outsourcing

• risk acceptance.

How does disclosure manage risk?

• It deflects and reduces risk by preventing others from claiming they were misled.

• It eliminates the risk of committing an error.

• It accepts the risk of revealing confidential information.

• It transfers the risk of a code violation to the client

Which of the following statements about a company procedures manual as a risk management device is true?

• It places all the responsibility for compliance on the broker.

• It relieves the licensee of responsibility for knowing and obeying the law.

• It can be a guide to compliance with the law

• It adds to the risk of misleading the public.

In what sense is the use of standardized forms a risk management procedure?

• It eliminates the risk of being unable to draft a contract correctly.

• It reduces the risk of losing a client by having to make a referral to an attorney.

• It reduces the risk of committing an unauthorized practice of law.

• It eliminates the risk of wasting valuable time in creating custom forms.

Keeping thorough records of every transaction is not only a risk management technique, it is

• good for company morale.
• necessary for obtaining market share.
• a technique for discovering market trends.
• a legal requirement.

Which of the following communication records must (as opposed to should) be kept?

• Notes on every conversation
• Copies of required communications to principals
• Notes from company training sessions
• Business cards of licensees one meets at open houses.

The standard E & O policy covers damages resulting from

• failure to disclose an environmental condition
• antitrust violations
• mishandling of earnest money deposits
• negligence, error or omission in carrying out professional services.

Which of the following is a common risk relating to the agency relationship?

• Failing to inform and disclose properly.

• Failing to take a personal interest in a transaction.

• Acting as an exclusive agent without an oral agency agreement

• Forgetting to record the listing agreement.

Even after giving buyer and seller the required information about property condition disclosures, the licensee may still be subject to legal action for

• failing to detect customer misrepresentations.

• failing to disclose known adverse facts.

• relying on publicly available market information

• advising the purchaser to exercise due diligence.