RMI 3004 - Midterm Exam

What is the definition of Risk?

• Certainty regarding an outcome

• Uncertainty regarding an outcome; potential consequences from that outcome

• Probability of Loss

Risk is not equal to _______.

• Probability of Loss

• Certainty

• Opportunity

• Safety

Human Capital is exposed to _______.

• Personal Risks

• Financial Risks

• Operational Risks

• Market Risks

What are the financial consequences caused by personal risks such as injury, illness, death, unemployment, and retirement?

• Loss of Income and Medical Expenses

• Increased Savings

• Higher Taxes

• None of the above

What is the role of Risk Management (RM) in a corporation?

• Optional component

• Integral component

• Unnecessary component

• Temporary component

Define Pure Risk.

• Only two outcomes = loss or no loss

• Three possible outcomes = loss, gain, or no change

• Measurable variation of actual outcomes

• Results from new & emerging trends

Define Speculative Risk.

• Only two outcomes = loss or no loss

• Three possible outcomes = loss, gain, or no change

• Measurable variation of actual outcomes

• Results from new & emerging trends

What is Subjective Risk?

• Measurable variation of actual outcomes

• Perceived amount of risk, varies by individual/organization

• Effects specific individuals/businesses

• Risks that affect entire systems

What is Objective Risk?

• Measurable variation of actual outcomes

• Perceived amount of risk, varies by individual/organization

• Effects specific individuals/businesses

• Risks that affect entire systems

Fill in the blank: Static risk does not change over time and is always _______.

• present

• absent

• variable

• temporary