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Cpcu Exam 1 Questions And Answers With Verified Solutions 100% Correct!!!
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Cpcu Exam 1 Questions And Answers With Verified Solutions 100% Correct!!!
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Cpcu Exam 1 Questions And AnswersWith Verified Solutions 100% Correct!!!
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
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