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Exam (elaborations)

CPCU Exam 1 Questions and Answers

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  • Course
  • CPCU - Chartered Property Casualty Underwriter
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  • CPCU - Chartered Property Casualty Underwriter

CPCU Exam 1 Questions and Answers Probability The likelihood that an outcome or event will occur Risk Uncertainty about outcomes, with the possibility that some outcomes can be negative Previous Play Next Rewind 10 seconds Move forward 10 seconds Unmute 0:08 / 0:15 Full ...

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  • October 24, 2024
  • 11
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • CPCU - Chartered Property Casualty Underwriter
  • CPCU - Chartered Property Casualty Underwriter
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CPCU Exam 1 Questions and Answers
Probability - answer The likelihood that an outcome or event will occur

Risk - answer Uncertainty about outcomes, with the possibility that some outcomes
can be negative

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 opinions

Diversifiable Risk - answer A risk that affects only some individuals, businesses, or
small groups

Systemic Risk - answer The potential for a major disruption in the function of an
entire market or financial system

Market Risk - answer Uncertainty about an investment's future value because of
potential changes in the market for that type of investment

Liquidity Risk - answer The risk that an asset cannot be sold on short notice without
incurring a loss

Risk Source (ISO 31000) - answer Element which alone or in combination has the
intrinsic potential to give rise to risk

Four Quadrants of Risk - answer - Hazard Risk
- Operational Risk
- Financial Risk
- Strategic Risk

Hazard Risk - answer Arises from property, liability or personnel loss exposures

Operational Risk - answer Arises from people, processes, systems, or controls

Financial Risk - answer Arises from the effect of market forces on financial assets or
liabilities

, Strategic Risk - answer Arises from trends in the economy and society

Residual Uncertainty - answer Level of risk remaining after an individual or
organization implements their risk management plans

Risk Management - answer The process of making and implementing decisions that
will minimize the adverse effects of accidental losses on an organization

Loss Exposure - answer Any condition or situation that presents a possibility of loss,
whether or not an actual loss occurs

3 Elements of Loss Exposure - answer - An asset exposed to loss
- Cause of loss (peril)
- Financial consequences of that loss

Hazard - answer A condition that increases the frequency or severity of a loss

Moral Hazard - answer A condition that increases the likelihood that a personal
intentionally cause or exaggerate a loss

Morale Hazard - answer A condition of carelessness or indifference that increases
the frequency or severity of loss

Physical Hazard - answer A tangible characteristic of property, persons, or
operations that tends to increase the frequency or severity of loss

Legal Hazard - answer A condition of the legal environment that increases loss
frequency or severity

Property Loss Exposure - answer A condition that presents the possibility that a
person or an organization will sustain a loss resulting from damage (including
destruction, taking, or loss of use) to property in which that person or organization has a
financial interest

Tangible Property - answer Property that has a physical form

Real Property - answer Tangible property consisting of land, all structures
permanently attached to the land, and whatever is growing on the land

Personal Property - answer All tangible or intangible property that is not real property

Intangible Property - answer Property that has no physical form

Liability Loss Exposure - answer Any condition or situation that presents the
possibility of a claim alleging legal responsibility of a person or business for injury or
damage suffered by another party

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