Insurance-2

Which risk management technique involves reducing the frequency or severity of losses?

• Risk avoidance

• Risk retention

• Risk mitigation

• Risk transfer

Which risk management strategy involves accepting the potential consequences of a risk without any form of protection?

• Risk avoidance

• Risk retention

• Risk transfer

• Risk mitigation

What role does reinsurance play in risk management for insurance companies?

• It eliminates the need for risk management practices

• It transfers a portion of the risk to other insurance companies

• It increases the likelihood of catastrophic losses

• It reduces insurance premiums for policyholders

Which of the following statements about risk management in insurance is true?

• Risk management is only important for life insurance, not property or casualty insurance.

• Risk management aims to eliminate all risks from the insurance portfolio.

• Effective risk management can help insurance companies maintain financial stability and meet policyholder obligations.

• Risk management practices are the same for all insurance companies regardless of their size or business model.

What is the purpose of diversification in risk management for insurance companies?

• To concentrate risk exposure in specific geographic regions

• To minimize the impact of losses by spreading risk across different types of insurance policies or geographic areas

• To eliminate all risks from the insurance portfolio

• To increase the likelihood of catastrophic losses

What does risk assessment involve in insurance?

• Accepting all risks regardless of their potential impact

• Identifying and evaluating potential risks and their impact on insurance portfolios

• Transferring all risks to reinsurance companies

• Denying insurance coverage for high-risk individuals

What is the purpose of conducting risk modeling and analysis in insurance risk management?

• To eliminate all risks from the insurance portfolio

• To assess the financial stability of insurance companies

• To identify and quantify potential risks and their impact on insurance portfolios

• To increase insurance premiums for policyholders

Which of the following best describes risk transfer in insurance?

• Avoiding all risks by refusing to provide insurance coverage

• Sharing risks with other insurance companies through reinsurance

• Absorbing all risks without any form of protection

• Ignoring potential risks and their impact on the insurance portfolio

What is the primary goal of risk management in insurance?

• To maximize profits for insurance companies

• To minimize the number of insurance claims

• To identify, assess, and mitigate risks

• To increase insurance premiums

Which of the following is NOT a step in the risk management process in insurance?

• Risk assessment

• Risk avoidance

• Risk transfer

• Risk management