I. TRUE OR FALSE 11.

All risks can be transferred to a

third party like an insurance company.
1. The determination of how an
FALSE
organization will pay for loss events in
the most effective and least costly way 12. Techniques for managing risk can
possible. TRUE be classified broadly as either risk
control or risk financing. TRUE
2. For some risks, the best response
may be is to transfer them. TRUE 13. The purpose of treatment is that,
whilst continuing within the organization
3. If the frequency is high and the
with the activity giving rise to the risk,
consequence is low, to tolerate is the
action (control) is taken to constrain
proper hazard response. FALSE
the risk to an acceptable level. TRUE
4. Once the risk assessment has been
14. The risk manager does not work
completed, rank the potential risks
alone. TRUE
from least severe to most. FALSE
15. Some risks are taken deliberately
5. Areas with the highest level of
by organizations in order to achieve
acceptable risk should be the priority.
their mission. TRUE
FALSE
II. MULTIPLE CHOICE
6. We should always avoid risk. FALSE
1. The type of risk with potential to
7. The main principle of risk
enhance the achievement of the mission
management is that it delivers value to
of the organization.
the organization. TRUE
A. Opportunity risk
8. The last stage of risk management
is reporting and mitigating of risk B. Hazard risk
performance, actions and events.
C. Enterprise risk
FALSE
D. Liability risk
9. Business risk is a term that
encompasses all risks faced by a 2. Refers to the process that
business firm. FALSE identifies loss exposures faced by an
organization and selects the most
10. Taking a risk can also result in a
appropriate techniques for treating
positive outcome. TRUE
such exposures.

A. Risk monitoring
B. Risk management II. Business sector

C. Risk financing III. Opportunities and threats

D. Risk mitigation IV. Strengths and weaknesses

3. A situation in which there are only A. I, II, III

the possibilities of loss or no loss.
B. IV only
A. Speculative risk
C. I only
B. Enterprise risk
D. I and IV
C. Pure risk
7. A strategy to prepare for and
D. Strategic risk lessen the effects of threats faced by
a business.
4. Which among these are included in
the 4Ts of hazard response? A. Risk control

A. Tolerate, Transfer, Think, Try B. Risk mitigation

B. Treat, Terminate, Tolerate, C. Risk management

Transfer
D. Risk monitoring
C. Transfer, Try, Tell, Tolerate
8. Aims to eliminate the source of the
D. Terminate, Think, Try, Treat risk altogether.

5. A risk that affects only individuals A. Risk control

or small groups and not the entire
B. Loss prevention
economy.
C. Loss reduction
A. Diversifiable risk
D. Avoidance
B. Operational risk
9. To reduce the severity of a loss
C. Financial risk
after it occurs – knowing that a loss is
D. Non-diversifiable risk inevitable.

6. Which of the following are included A. Risk control

in establishing internal context?
B. Loss prevention
I. The organization itself
C. Loss reduction 13. The act of watching projects and
the associated risks for changes in the
D. Avoidance
impact of the associated risks.
10. The techniques that reduce the
A. Risk control
frequency or severity of losses.
B. Risk financing
A. Risk control
C. Risk mitigation
B. Loss prevention
D. Risk monitoring
C. Loss reduction
14. STATEMENT 1: Identify potential
D. Risk financing
events and event sequences where risk
11. The techniques that provide for is presented.
the payment of losses after they
STATEMENT 2: Risks can be in the
occur.
form of existing vulnerabilities in the
A. Risk control organization or known threats.

B. Risk mitigation A. Both statements are true.

C. Risk financing B. Both statements are false.

D. Risk monitoring C. Only statement 1 is true.

12. STATEMENT 1: The exposure may D. Only statement 2 is true.

be tolerable without any further action
15. Which of the following is/are
being taken.
incorporated with property loss
STATEMENT 2: Some risks will only be exposures?
treatable, or containable to acceptable
I. Building, plants, and other
levels.
structures
A. Both statements are true.
II. Company vehicles, planes, boats,
B. Both statements are false. and mobile equipment

C. Only statement 1 is true. III. Defective products

D. Only statement 2 is true. IV. Liability suits

A. I only
B. I and II
C. I, II, III, IV
D. I and III
16. Involves the recognition of risks
and the rating of them to determine
the significant risks facing the
organization, project or strategy.
A. Risk assessment
B. Risk control
C. Risk identification
D. Risk mitigation
17. Which component of internal
context does the following issues
included?
I. Availability of adequate funds to
fulfill strategic plans
II. Correct allocation of funds for
investment
III. Internal financial control
environment
A. Infrastructure component
B. Reputational component
C. Marketplace component
D. Financial component
18. A situation in which either profit
or loss is possible.
A. Pure risk
B. Speculative risk
C. Diversifiable risk
D. Non-diversifiable risk
19. Affects the entire economy or
large numbers or persons or groups
within the economy.
A. Pure risk
B. Speculative risk
C. Diversifiable risk
D. Non-diversifiable risk
20. Uncertainty of loss because of
adverse changes in commodity prices,
interest rates, foreign, exchange
rates, and the value of money.
A. Strategic risk
B. Enterprise risk
C. Financial risk
D. Operational risk
21. Which among the following is/are
the cause of unemployment?
A. Business cycle downswings
B. Technological and structural changes in
the economy
C. Imperfections in the labor market
D. All of the above
22. A risk wherein you held liable if
you do something that results in bodily
injury or property damage to someone
else.
A. Property risk
B. Liability risk
C. Personal risk
D. Operational risk
23. STATEMENT 1: Risk may have
positive or negative outcomes or may
result in uncertainty.
STATEMENT 2: Risk may be
considered to be related to an
opportunity or a loss or the presence or
uncertainty for an organization.
A. Both statements are true
B. Both statements are false
C. Only statement 1 is true
D. Only statement 2 is true
24. Physical damage risk to property
(at the enterprise level) such as caused
by fire, flood, weather damage are
example of what kind of risk?
A. Pure risk
B. Speculative risk
C. Diversifiable risk
D. Non-diversifiable risk
25. Which of the following is not an
example of physical hazard?
A. Slippery roads
B. Poorly lit stairwells
C. Old wiring
D. Leaving a door unlocked
26. An arson case from an insured
business that is losing money is an
example of what hazard?
A. Physical hazard
B. Moral hazard
C. Morale hazard
D. Legal hazard
27. Refers to the exposures that
result from environmental conditions
that the firm commonly cannot
influence, such as the regulatory
environment and market conditions.
A. Internal risks
B. External risks
C. Opportunity risks
D. Pure risk
28. STATEMENT 1: Hazard is the
cause of loss.
STATEMENT 2: Peril is the condition
that creates or increases the
frequency or severity of loss.
A. Both statements are true. D. Insurance

B. Both statements are false. 32. Which of the following is/are the
values that the organization is willing to
C. Only statement 1 is true.
put at risk?
D. Only statement 2 is true.
A. Hazard tolerance
29. Statutes that require insurers to
B. Control acceptance
include coverage for certain benefits in
health insurance plans such as coverage C. Opportunity investment
for alcoholism, is an example of?
D. All of the above
A. Legal Hazard
33. Aims at reducing the probability of
B. Physical hazard loss so that the frequency of losses is
reduced.
C. Moral Hazard
A. Avoidance
D. Attitudinal Hazard
B. Loss prevention
30. Means that an individual or a
business firm retains part or all of the C. Loss reduction
losses that can result from a given
D. None of the above
risk.
34. This is the act of protecting one’s
A. Risk control
self against a particular loss by setting
B. Risk mitigation aside specific funds to pay for it in the
event that it should occur.
C. Risk retention
A. Passive retention
D. Risk financing
B. Non-insurance transfers
31. Practice in which no funds are set
aside on a mathematical basis to pay C. Insurance
for expected losses.
D. Active retention
A. Passive retention
35. Which among these shows the
B. Active retention proper risk management cycle?

C. Non-insurance transfers
A. Identify the risk – Assess the risk –
Mitigate the risk – Monitoring and
Review
B. Assess the risk – Mitigate the risk –
Monitoring and Review
C. Identify the risk – Assess the risk –
Monitoring and Review – Mitigate the risk
D. Identify the risk – Mitigate the risk –
Assess the risk – Monitoring and Review
36. Which of the following is/are an
example of business income loss
exposure?
A. Extra expenses
B. Continuing expenses after a loss
C. Both A and B
D. Neither A nor B
37. Which of these is not included in
the stages of risk management?
A. Recognition
B. Ranking
C. Reaction
D. Reassuring
38. The prospect of loss resulting from
inadequate or failed procedures,
systems, or policies.
A. Pure risk
B. Strategic risk
C. Operational risk
D. Financial risk
39. Which of the following is/are
example(s) of non-diversifiable risk?
I. Rapid Inflation
II. War
III. Hurricane
IV. Car theft
A. I only
B. II and III
C. I, II, III
D. I, II, III, IV
40. STATEMENT 1: Premature death
refers to the death of a family head
with unfulfilled financial obligations.
STATEMENT 2: A death of a
kindergarten boy is an example of a
premature death.
A. Both statements are true.
B. Both statements are false.
C. Only statement 1 is true.
D. Only statement 2 is true.
41. Business firms own valuable
business property that can be damaged
or destroyed by numerous perils.
A. Property risk
B. Liability risk B. Moral hazard

C. Enterprise risk C. Morale hazard

D. Operational risk D. Legal hazard

42. Is the combination of the 46. Which of the following is/are

probability of an event and its importance of risk management?
consequence.
I. Reputation becomes more and more
A. Hazard important

B. Peril II. High-profile losses and failures ruin

reputations
C. Risk
III. Reputational damage - especially
D. Loss
to worldwide brands
43. The probability that an event will
IV. Regulatory pressures continue to
occur.
increase
A. Peril
A. I only
B. Loss
B. II only
C. Risk
C. I, II, III
D. Hazard
D. I, II, III, IV
44. Which of the following is/are an
47. What does the acronym PACED in
example(s) of objective probability?
principles of risk management stands
A. Tossing a coin for?

B. Winning a lotto since its your birthday A. Proportionate, Aligned,

Comprehensive, Embedded, Dynamic
C. Both A and B
B. Proportionate, Assurance,
D. Neither A nor B Comprehensive, Effective, Decision

45. Faking an accident to collect from Making

an insurer, is an example of what type C. Proportionate, Achieve, Control,

of hazard? Enhanced, Dynamic

A. Physical hazard
D. Proportionate, Aligned, Control,
Embedded, Dynamic
48. Uncertainty regarding the firm’s
financial goals and objectives.
A. Enterprise risk
B. Operational risk
C. Strategic risk
D. Financial risk
49. Which of the following is/are
included in the reputational component
of external context?
A. Public perception
B. Competitors
C. Both A and B
D. Neither A nor B
50. A death or disability of key
employees, is an example of?
A. Crime loss exposure
B. Liability loss exposure
C. Human resources loss exposure
D. Property loss exposure
51. Are methods other than insurance
by which a pure risk and its potential
financial consequences are transferred
to another party.
A. Non-insurance transfers
B. Insurance
C. Risk retention
D. Risk financing
52. The most practical method for
handling major risks.
A. Non-insurance transfers
B. Insurance
C. Risk retention
D. Risk financing
53. STATEMENT 1: If the frequency
is low and the consequence is also low,
you need to treat the risk.
STATEMENT 2: If the frequency is
low and the consequence is high, you
need to tolerate the risk.
A. Both statements are true.
B. Both statements are false.
C. Only statement 1 is true.
D. Only statement 2 is true.
54. Which among these is/are the
barriers of implementation?
I. Lack of understanding of risk
management and belief that it will
suppress entrepreneurship.
II. Establish a shared understanding,
common expectations, and a consistent,
language of risk in the organization.
III. Identify a sponsor on the main
board of the organization and confirm
shared and common priorities.
IV. Agree a strategy that sets out the
anticipated outcomes and confirms the
benchmarks for anticipated benefits.
A. I and II
B. I only
C. II only
D. I, II, III, IV
55. The individual’s personal estimate
of the chance of loss.
A. Objective probability
B. Attitudinal hazard
C. Subjective probability
D. Moral hazard
56. STATEMENT 1: The organization
is required to identify each specific
external, internal and risk management
context issue that could impact the
organization.
STATEMENT 2: The context factors
present and take appropriate actions to
mitigate the risk and embrace the
opportunities.
A. Both statements are true.
B. Both statements are false.
C. Only statement 1 is true.
D. Only statement 2 is true.
57. Which of the following is/are
example(s) of crime loss exposures?
A. Murder
B. Fraud
C. Both A and B
D. Neither A nor B
58. Damage to the company’s public
image is an example of?
A. Employee benefit loss exposure
B. Intangible property loss exposure
C. Foreign loss exposure
D. Business income loss exposure
59. What does the acronym MADE2 in
the benefits of risk management stands
for?
A. Management, Aligned, Dynamic,
Effective and Efficient
B. Mandatory, Assurance, Description,
Embedded and Effective
C. Mandatory, Assurance, Decision
making, Effective and Efficient
D. Management, Assurance, Decision
making, Ensure and Efficient
60. A house burns because of fire. The
peril in that situation is the _____.
A. Owner of the house
B. House

C. The firemen

D. None of the above