FP2 - Final Exam Review Part 1

When Bob covers the windows of his deli with plywood to protect them from approaching hurricane winds, what is he trying to do with the risk?

• accept

• analyze

• mitigate

• transfer

An executive whose responsibilities include the planning, controlling, preventing, and limiting of business losses and enhancing possibilities for gain is known as a:

• CRO (chief risk officer)

• CFO (chief financial officer)

• CIO (chief insurance officer)

• COO (chief operations officer)

Anna is an insurance agent who is working with Tracy, the sole proprietor of a small dental practice, to determine the type of liability insurance she needs. Anna suggests that Tracy needs to purchase insurance that will cover her legal expenses in the event a patient sues her for negligence. What type of liability insurance is Anna advising Tracy to purchase?

• workers' compensation

• commercial

• malpractice

Michelle has acquired proof that her coworker Ted has been embezzling money from the company. If Michelle fails to inform her employer about Ted's activities, what will likely occur?

• The company's financial risk will increase.

• The company's property insurance premium will increase.

• The government will fine the company for noncompliance.

The two dimensions of risk are:

• probability and impact.

• probability and avoidance.

• mitigation and acceptance.

A health food company claims that its products will cure many diseases, but without proof of this claim. When customers realized that the claim was unfounded, the company suffered from a damaged reputation and many lawsuits. The company's behavior is considered to be:

• favorable.

• moral.

• normal.

A good source of information about the retroactive risks of a business would be a/an:

• favorable.

• moral.

• normal.

In addition to basic homeowner's insurance coverage, insurance agents whose clients live in flood or earthquake zones might suggest that they purchase:

• optional perils endorsements

• assisted living coverage

• rental unit coverage

• limited term riders

Paulo is a terrible driver and has had many traffic tickets and accidents. What type of insurance will his insurance company have to get for Paulo?

• reinsurance

• excess insurance

• standard insurance

• exclusion insurance

To save money, an automobile manufacturer imported substandard parts resulting in engine fires. The manufacturer is now facing a class-action lawsuit which is an example of a risk associated with:

• trade secrets

• purchasing manager

• business incident log

• local weather forecast