RMIN 5100S Test 1 Atkinson Questions and Answers | Latest Update | 2024/2025 | Graded A+
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Course
RMIN 5100S
Institution
RMIN 5100S
RMIN 5100S Test 1 Atkinson Questions
and Answers | Latest Update | 2024/2025
| Graded A+
What is risk avoidance in risk management?
Risk avoidance involves eliminating a risk entirely by choosing not to engage in the activity
that creates the risk.
How does risk retention function in r...
RMIN 5100S Test 1 Atkinson Questions
and Answers | Latest Update | 2024/2025
| Graded A+
What is risk avoidance in risk management?
✔✔ Risk avoidance involves eliminating a risk entirely by choosing not to engage in the activity
that creates the risk.
How does risk retention function in risk management?
✔✔ Risk retention occurs when an individual or organization chooses to accept and retain the
financial responsibility for a risk instead of transferring it to an insurer.
What is the concept of risk control?
✔✔ Risk control involves implementing measures to reduce either the frequency or severity of a
risk, such as installing safety equipment or adopting best practices.
What is the role of underwriting in the insurance process?
✔✔ Underwriting is the process by which insurers assess the risk of insuring an individual or
entity, determining appropriate premiums and coverage terms.
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,How do deductibles help manage risk in insurance policies?
✔✔ Deductibles require the insured to pay a portion of the loss before the insurance coverage
kicks in, encouraging careful behavior and reducing small claims.
What is reinsurance, and why do insurers use it?
✔✔ Reinsurance is when an insurance company transfers some of its risk to another insurer to
protect itself from large losses and improve financial stability.
What is the law of large numbers, and how does it relate to insurance?
✔✔ The law of large numbers states that as the number of exposure units increases, the actual
loss experience will become closer to the expected loss, allowing insurers to predict losses more
accurately.
What is a risk appetite in the context of risk management?
✔✔ Risk appetite refers to the amount and type of risk an organization is willing to accept in
order to achieve its objectives.
How do insurance companies use risk classification?
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, ✔✔ Risk classification is used by insurers to group individuals or entities into categories based
on the level of risk they present, which helps determine appropriate premiums.
What is the definition of risk in risk management?
✔✔ Risk is the uncertainty regarding potential loss or gain that can affect an individual or
organization.
What is the primary goal of risk management?
✔✔ The primary goal of risk management is to minimize potential losses while maximizing
opportunities for gain.
What are the two main types of risk?
✔✔ The two main types of risk are pure risk, which involves only the possibility of loss, and
speculative risk, which involves the possibility of loss or gain.
How does risk pooling work in insurance?
✔✔ Risk pooling combines the risks of many individuals or entities, spreading the potential loss
over a larger group to make losses more predictable.
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