CPCU 500 Practice Exam 1 with complete solutions

Autonomous Vehicle Applications (AVA) is a start-up company that develops safety technologies that can be sold to companies that are producing autonomous vehicles. One technology AVA is developing allows an autonomous vehicle to detect, extract, and analyze images; and then to respond to the images. For example, the technology would detect a presence in a crosswalk, extract the image, and a computer would analyze the image. When the image was determined to be a human being, the vehicle would slow down or stop until the crosswalk was clear. This technology, which is designed to capture and analyze images, and to act on the recognition of the image; is called Select one: A. Accelerometer technology. B. Transducer technology. C. Visual acuity. D. Computer vision. - Answer- D. Computer vision. Which one of the following statements is true regarding the evolution of risk and risk management? Select one: A. The definitions of risk and risk management have become considerably more focused over the years. B. Risk management now involves only those areas where the organization has some degree of control over the outcome. C. Risk management is increasingly being applied to the risks associated with accidental losses. D. The definition of risk has evolved to include positive as well as negative attributes. - Answer- D. The definition of risk has evolved to include positive as well as negative attributes. The traditional definition of risk management reflects the traditional concept of risk as Select one: A. Both positive and negative. B. Strategic. C. Negative. D. Uncontrollable. - Answer- C. Negative. In an effort to reduce expenses, increase profitability, and reduce human errors; ABC Insurance Company decided to automate most of its personal lines underwriting function. The company now uses standardized application forms that are submitted electronically to one of the company's regional offices. At each regional office, a computer with a scanner reads the applications. The computer has been programmed with acceptable answers to the questions. If the answers on the application are all acceptable, the policy is automatically issued. Rejected applications are automatically forwarded to a human underwriter who reviews them. The use of this technology has reduced the company's expense ratio by two and a half percent, and reduced the time it takes to issue a policy. ABC Insurance Company's use of computers to evaluate applications electronically is an application of Select one: A. Actuator technology. B. Artificial intelligence. C. Risk management information systems. D. Radiant sensors. - Answer- B. Artificial intelligence. Take Your Order (TYO) is a company that specializes in taking product orders for vendors. The manufacturer of a product can run a television or internet ad for a product with a toll-free number. Customer calls for the products are routed to TYO, where one hundred operators are available to receive the calls. Each operator is assigned a cubicle with a computer terminal, video display monitor, and a telephone. TYO experienced high workers compensation claims from its operators, claiming neck strain, eye strain, and wrist pain. In an effort to reduce such injuries, TYO evaluated each operator's work area. The height of chairs and video monitors were adjusted, curved computer keyboards and wrist-rests were provided, and the telephones were replaced with audio headsets. Workers compensation costs dropped significantly. The science of designing work spaces based on interaction between people and the equipment in the work space is called Select one: A. Ergonomics.. B. Artificial intelligence. C. Smart systems. D. Data analytics. - Answer- A. Ergonomics.. Which one of the following best explains how most smart products potentially improve risk management? Select one: A. They generate big data to which advanced analytics can be applied. B. They measure worker fatigue. C. They assess risks in dangerous areas. D. They scan and inspect structures for unsafe conditions. - Answer- A. They generate big data to which advanced analytics can be applied. Which one of the following data capture tools has led to an explosion of risk management innovation by allowing smart products to transmit data to each other and to central hubs? Select one: A. Internet of Things B. Blockchain C. Artificial intelligence D. Cloud computing - Answer- A. Internet of Things The emerging technologies applied to risk assessment and control link the physical domain to the virtual domain. Together, these domains linked by the emerging technologies create a Select one: A. Connected ecosystem. B. Risk management information system. C. Smart system. D. Risk management matrix. - Answer- A. Connected ecosystem. Which one of the following statements is true with regard to preventive analytics? Select one: A. Preventive analytics involves data collection at discrete points in time, such as 10 AM or 4 PM each day, and comparison of these values at discrete points in time. B. Preventative analytics uses human assets to analyze data collected by smart products. C. Preventive analytics uses smart products and data analytics to identify root loss causes and their implications. D. Preventive analytics is backward-looking, basing corrective prescriptions on the organization's past loss history. - Answer- C. Preventive analytics uses smart products and data analytics to identify root loss causes and their implications. AMRM Insurance Company sells insurance in Virginia, North Carolina, South Carolina, and Georgia. The company has compiled a policyowner data base that can be used to send text messages when hurricanes approach. The company provides early warnings, storm updates from the National Weather Service, and hurricane safety measures. The company credits the system with reduced hurricane claims. The use of the texting system is an example of Select one: A. Artificial intelligence. B. Sensor networks. C. Experience rating. D. Preventive analytics. - Answer- D. Preventive analytics. The difference between risk tech and insurtech is Select one: A. Insurtech applies to many different industries while risk tech is limited in focus to insurance, reinsurance, and nontraditional risk financing alternatives. B. Risk tech is applicable in personal risk management situations, which insurtech is designed for application in commercial business situations. C. Risk tech goes beyond insurtech by expanding its focus to making risk financing more efficient and preventing and mitigating losses in a variety of industries. D. Insurtech is a broader concept and incorporates risk tech as one of its underlying tenets. - Answer- C. Risk tech goes beyond insurtech by expanding its focus to making risk financing more efficient and preventing and mitigating losses in a variety of industries. The National Oceanic and Atmospheric Administration (NOAA), a U.S. Government agency, monitors tsunami risk. Earthquakes under the sea often cause large waves which can have a disastrous impact on coastal communities. In addition to monitoring earthquake data and tides, NOAA recently added a new tool -- tsunami detection buoys. The buoys are placed in the sea and they are equipped with sensors to detect high wave levels so that an early warning can be given to a coastal area if an evacuation is needed. This application of the use of smart products illustrates their use in Select one: A. Supply chain management. B. Workplace safety management. C. Catastrophe management. D. Transportation management. - Answer- C. Catastrophe management. Clear-Rite Company specializes in the clean-up of hazardous chemical spills. Workers performing clean-up operations must use safety suits to prevent exposure to the chemicals. The suits include pulse and respiration monitors, body temperature sensors, and chemical sensors. The monitors and sensors report data to a mobile operations center which is deployed to each clean-up site. The pulse and respiration monitors and the sensors that are part of the protective gear are called Select one: A. Magnetometers. B. Accelerometers. C. Drone technologies. D. Wearable technologies. - Answer- D. Wearable technologies. Which one of the following is a tool that can be used by fraud investigators to compare documents and analyze notes? Select one: A. Text mining B. Root cause analysis