Exam (elaborations)
CIP C131 - Ch 1 to 6
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CIP C131 - Ch 1 to 6
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CIC131 - Ch 1 to 6Identifying/analyzing loss exposures - CORRECT ANSWER-Risk Analysis
Pure Risk - CORRECT ANSWER-A risk that presents the chance of loss but no
opportunity for gain
Techniques for managing risk - CORRECT ANSWER-Prevention
Self-insuring
Transferring
Court case where judge disallowed transfer of liability exclusion due to
misexplained exclusion - CORRECT ANSWER-Greenven v. Blackcomb Skiing
Ent.
Examples of 5 outside experts that can be referred - CORRECT ANSWER-Police
Accountant
Lawyer
Fire
Safety consultants
What are the possible permanent losses, even with insurance - CORRECT
ANSWER-"Opportunity cost"
Loss of customers
Business growth
Setting up new facilities
Loss of employees
How to research a prospective client's company and industry - CORRECT
ANSWER-Research industry: internet, library, magazines, colleagues, claims
experts
Discussing client's business activities:
by comparing with similar businesses (how do they compare and what are their
differences?
What changes/plans do they have for the business in the future?
,Review loss history/severity of losses
If so, implement a deductible
Compare the loss history with other companies
Inspect the job site
Risk - CORRECT ANSWER-A chance of risk
Speculative Risk - CORRECT ANSWER-A chance of loss, with a chance to gain
profit
Uninsurable
Pure Risk - CORRECT ANSWER-The chance of loss without any chance of gain
Insurable
Risk management - CORRECT ANSWER-Effective strategy to handle risk
Systematic approach to eliminate loss exposures/minimize detrimental effects of
a loss
5 steps of risk management process - CORRECT ANSWER-1. Identifying and
analyzing risk exposures
2. Formulating options
3. Selecting the best technique
4. Implementing the chosen technique
5. Monitoring and modifying the result as needed
Risk management - CORRECT ANSWER-Strategy to handle risk
Systematic approach to eliminate / minimize loss
,Identify, measure, control risk
Risk management process - CORRECT ANSWER-1. Identify potential losses
2. Measure and analyze the loss exposures
3. Select the appropriate combination of techniques for treating the loss
exposures
4. Implement
5. monitor the risk management program
Methods to manage risk - CORRECT ANSWER-1. avoiding
2. reducing
3. transferring
How to use risk management as a prospecting tool - CORRECT ANSWER-Only
take on risk that are prepared to manage
Job positions that include risk manager responsibilities - CORRECT
ANSWER-Example:
VP
HR manager
accountant
legal counsel
Risk Manager - CORRECT ANSWER-Responsible for risk management
functions
The principal
Outside experts assist in risk management process - CORRECT
ANSWER-Police
Accountant
Fire
Legal
Safety expert
, Building a positive relationship with clients - CORRECT ANSWER-Identifying
new and changed exposures
It is important to identify exposures to - CORRECT ANSWER-Find cost effective
manners to manage risk by
Prevention
Self-insuring
Transfer
Frequency of loss - CORRECT ANSWER-number of losses in a given time
period. Low frequency equals low probability.
Severity of loss - CORRECT ANSWER-Actual dollar amount of loss
Techniques available to manage risk - CORRECT ANSWER-1. Avoiding
2. Reducing
3. Transferring
Business losses not covered by insurance - CORRECT ANSWER-Loss of
customers
Loss of future profits
Relocation costs
Loss of employees
Examples of physical / admin safety measures to reduce frequency and severity
of losses - CORRECT ANSWER-Physical:
Security cameras
Admin:
Better accounting practices
Risk retention (how can a client) - CORRECT ANSWER-Voluntary/in-voluntary
Opt for insured to retain risk
Opt to have a deductible
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