Group 2 Activity

The main objective of risk management in accordance with cost is to

• Eliminate all risks completely

• Minimise the total cost of risk in a cost-effective way

• Spend as much as possible on prevention

• Ignore small risks

Which of the following represents the expected cost of losses?

• Money used for training

• Money spent on insurance premium

• Money a company expects to lose due to accidents or theft

• Money used for risk financing

The cost of loss control refers to

• Expenses for preventing or reducing losses

• Money kept as reserved fund

• The total losses faced by the company

• Remaining risks after all measures

Cost of loss financing includes which of the following?

• By insurance or keeping reserves to cover losses

• Installing safety equipment

• Training employees

• Ignore small risks

Residual uncertainty in risk management means

• Risk completely eliminated

• Remaining risks even after all precautions

• Insurance premium paid for losses

• Cost of prevention

What is a key feature of pure risk?

• It can result in profit or loss

• It involves only the chance of loss or no gain

• It is completely under human control

• It always leads gain

Which of the following is an example of speculative risk?

• Fire in a factory

• Theft of a car

• Investing in the stock market

• Falling ill

What type of risk is insurable?

• Pure risk

• Speculative risk

• Both Pure and Speculative risk

• None of the above

Starting a new business is an example of:

• Pure risk

• Speculative risk

• Insurable risk

• Fundamental risk

Which statement correctly describes speculative risk?

• It involves only loss or no loss

• It cannot be influenced by personal decisions

• It may result in loss, no loss, or gain

• It is always covered by insurance