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 ...
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
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Pogba119. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.49. You're not tied to anything after your purchase.
