Exam (elaborations)
CPCU 500 BDU final test
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- CPCU 500 BDU Final Test
CPCU 500 BDU final test
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CPCU 500 BDU final testWhen an insured reports a loss, the insurer must determine whether the loss
triggers coverage. The primary method of post-loss recovery analysis is the
DICE method. The DICE method entails the following four steps: - -
Declarations, insuring agreement, conditions, and exclusions.
-Adverse selection is most likely to be found relating to coverage for which
of the following loss exposures? - -Windstorm
-Which of the following statements is correct regarding net income losses
associated with property losses as compared to net income ass0ciated with
liability losses? - -Net income losses associated with property losses can be
insured with policies offering reasonable premiums, while net income losses
associated with liability losses are generally uninsurable.
-Which one of the following statements is correct regarding the concept of
risk? - -The probability of an occurrence is measurable, and has a value
between zero and one
-Which one of the following statements is correct regarding risk
management? - -Organizations may find it difficult to establish a benchmark
to assess the performance of their risk management program because it is
difficult to assign a value to residual uncertainty.
-Which one of the following statements is correct regarding risk control
methods? - -Diversification is typically applied to managing business risk,
rather than hazard risk.
-Which one of the following represents a way an organization can increase
liquidity? - -Not paying dividents
-One of the advantages that risk transfer offers to an organization is: - -
Reducing exposure to large losses.
-Under the enterprise-wide risk management process, i there is a high
likelihood that an organization's competitors will undercut price, the
organization should consider the following two risk treatment strategies: - -
Avoid and mitigate
-Which one of the following statements is correct regarding the differences
in risk categories between traditional risk management and enterprise-wide
risk management? - -Enterprise-wide risk management seeks to optimize
risk-taking in relationship to strategic goals.
, -Which one of the following statements is correct regarding the concept of
pooling? - -Pooling arrangements do not change the severity or frequency of
individual loss expossures.
-The primary role of insurance is to: - -Pay for covered losses.
-Which one of the following is an example of a fortuitous loss? - -An
unknown thief steals a cell phone from the insured's car.
-Which one of the following statement is correct regarding characteristics of
insurable loss exposures? - -Insurers cannot determine an appropriate
premium unless the frequency or severity of a loss is measurable.
-Moral hazards are one reason insurance policies should not: - -Over
indemnify
-Which one of the following statements is correct regarding the concept of
insurable interest? - -The insurable interest requirement reduces the moral
hazard incentive that insurance may create for the insured.
-The risk financing technique of transfer is most appropriate for loss
exposure that exhibit the following characteristics: - -High severity and low
frequency
-Which one of the following statements is correct regarding the structure of
insurance policies? - -Endorsements take precedence over any conflicting
basic term in the policy.
-When assessing a loss, a risk management professional is determining the
value of damaged assets. The value of damaged assets can most likely be
located on which of the following financial statements? - -Balance sheet.
-Which of the following statements is correct regarding the Prouty Approach
to risk management? - -It helps risk management professionals prioritize
loss exposures.
-Which one of the following is a way in which enterprise- wide risk
management enhances the Associate in Risk Management six-step risk
management process? - -ERM requires communication and consultation with
all stakeholders.
-Which of the following is a function of Basel II? - -It established rules
designed to ensure a bank holds capital reserves commensurate with risks
assumed by the bank.
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