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CPCU 500 UPDATED ACTUAL Exam Questions and CORRECT Answers
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CPCU 500 UPDATED ACTUAL Exam Questions and CORRECT Answers Economy of Operations - CORRECT ANSWER - increase departmental and organizational efficiency, pre-loss risk mgmt goal Toerable uncertainty - CORRECT ANSWER - provide an awareness of potential losses and an assurance of their effecti...

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  • February 8, 2025
  • 24
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • CPCU 500
  • CPCU 500

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CPCU 500 UPDATED ACTUAL Exam
Questions and CORRECT Answers
Economy of Operations - CORRECT ANSWER - increase departmental and
organizational efficiency, pre-loss risk mgmt goal


Toerable uncertainty - CORRECT ANSWER - provide an awareness of potential losses
and an assurance of their effective management keeping the worry of accidental loss at a
tolerable level (pre-loss risk mgmt goal)


Survival - CORRECT ANSWER - resume operations eventually (post loss risk mgmt goal)



Continuity of operations - CORRECT ANSWER - resume operations quickly (post loss
risk mgmt goal)


Profitability - CORRECT ANSWER - maintain at least a minimum profit level NO
MATTER WHAT accident occurs. Post loss risk mgmt goals


Earnings stability - CORRECT ANSWER - maintain a specified earnings level from year
to year post loss rm goal


Minimize the effects of loss on society for moral and good public reasons - CORRECT
ANSWER - social responsibility



maintain the pre-loss growth pattern - CORRECT ANSWER - growth post loss rm goal



6 STEPS OF THE RM PROCESS - CORRECT ANSWER - 1) IDENTIFY EXPOSURES
2) ANALYZE (MEASURE) LOSS EXPOSURES
3) EVALUATE ALTERNATIVE RM EXPOSURE TREATMENT TECHNIQUES
4) SELECT THE BEST COMBINATION OF RM TECHNIQUES

,5) IMPLEMENT DECISION
6) MONITOR THE PROGRAM


4 methods of loss exposure identification - CORRECT ANSWER - 1) Document analysis
2) Compliance review
3) Personal inspections
4) Experts


Hazard analysis - CORRECT ANSWER - under the experts method of loss exposures
identification, reveals potential losses by IDing conditions that increase expected loss frequency
and/or severity


Probability - CORRECT ANSWER - measures the expected frequency of an event over
time in a stable environment


Impossible events have a probability of - CORRECT ANSWER -0



Certain events have a probability of - CORRECT ANSWER -1



Theoretical probability - CORRECT ANSWER - theoretical and constant, calculated
without actual trials (coin toss)


Empirical probability - CORRECT ANSWER - practical and changeable, the law of large
numbers applies


Empirical probability - CORRECT ANSWER - computed from historical data from study
samples (mortality rates)


Factors that improve the reliability of empirical probabilities: - CORRECT ANSWER -
use of a large number of data, an organization with stable operations and loss patterns

, The smaller the standard deviation, - CORRECT ANSWER - the smaller the degree of
dispersion and the greater the accuracy of predictions.


Risk managers use standard deviation to measure - CORRECT ANSWER - the confidence
in projecting losses


Coefficient of variation - CORRECT ANSWER - compares the degree of dispersion
between 2 data sets w/ substantially different means


equals the std dev/mean


2 dimensions of timing - CORRECT ANSWER - when losses occur


when payments are made


The Prouty Approach - CORRECT ANSWER - method of jointly analyzing the frequency
and severity of a loss exposure


evaluates the significance of a particular loss exposure in terms of possible combinations of
expected loss frequency and severity


Prouty's 4 categories of loss frequency - CORRECT ANSWER - 1) Almost nil- extremely
unlikely to occur
2) Slight- could occur, but hasn't
3) Moderate- occurs occasionally
4) Definite- occurs regularly


Prouty's 3 categories of loss severity - CORRECT ANSWER - 1) slight- losses that can be
retained easily

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