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Cpcu 500 Ch. 1 Overview Of Risk Management Questions And Answers With Verified Solutions Already Rated A+

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Cpcu 500 Ch. 1 Overview Of Risk Management Questions And Answers With Verified Solutions Already Rated A+

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  • August 13, 2024
  • 14
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

  • uncertainty of outcome
  • probability
  • cpcu 500 ch 1 overview of risk management questio
  • possibility of a negative outcome
  • describe the difference between possibility and pr

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  • Cpcu
  • Cpcu

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Cpcu 500 Ch. 1 Overview Of Risk
Management Questions And Answers
With Verified Solutions Already Rated A+
uncertainty (of outcome) - ANSWER✔✔ about the type of outcome, timing of the
outcome, or both


possibility (of a negative outcome) - ANSWER✔✔ an outcome or event may or
may not occur


probability - ANSWER✔✔ the likelihood that an outcome or event will occur


Describe the two elements of risk. - ANSWER✔✔ 1) uncertainty of risk- risk
involves uncertainty about the type of outcome, the timing of the outcome or
both
2) possibility of a negative outcome- at least one of the potential outcomes is
negative which means a loss or a reduction in value


Describe the difference between possibility and probability. - ANSWER✔✔
Possibility means that an outcome or event may or may not occur. It does not
quantify risk; it only verifies that risk is present. Probability, the likelihood that an
outcome or event will occur, quantifies risk. It is measurable and has a value
between zero and one.


Explain how understanding various outcome probabilities can aid an organization
in its risk management efforts. - ANSWER✔✔ With an understanding of various
outcome probabilities, an organization can focus its risk management efforts on
risks that can be appropriately managed. The organization can also use

, probabilities to decide which activities (and associated risks) to undertake and
which risk management techniques to use.


Atwell Bus Company Case: uncertainty - ANSWER✔✔ Atwell faces uncertainty
regarding which contracts it will win (what will occur) or what its risk for next year
will be (when it will occur).


Atwell Bus Company Case: possibility - ANSWER✔✔ Atwell faces the possiblity
(may or may not happen) of a collision between two loaded school buses.


Atwell Bus Company Case: probability - ANSWER✔✔ Because Atwell has a new
fleet of buses, the probability (likelihood) of mechanical breakdown is low.


pure risk - ANSWER✔✔ a chance of loss or no loss, but no chance of gain


speculative risk - ANSWER✔✔ a chance of loss, no loss, or gain


credit risk - ANSWER✔✔ the risk that customers or other creditors will fail to
make promised payments as they come due.


subjective risk - ANSWER✔✔ the perceived amount of risk based on an
individual's or organization's opinion


objective risk - ANSWER✔✔ the measurable variation in uncertain outcomes
based on facts and data

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