Question A1

Risk can best be defined as

(a) variations from the unexpected outcome

(b) lack of knowledge or information

(c) certainty of future outcome

(d) uncertainty relating to an outcome (1 mark)

Question A2

A wooden house was badly damaged when it was caught on fire. Which of the following statement is correct?

(a) Hazard is the house, peril is the damaged.

(b) Hazard is the damaged, peril is the house.

(c) Hazard is the wooden construction, peril is the fire.

(d) Hazard is the fire, peril is the wooden construction. ( 1 mark)

Question A3 A civil war is an example of

(a) Speculative risk

(b) Fundamental risk.

(c) Pure risk.

(d) Particular risk. ( 1 mark)

Question A4

As an investor, McIlroy make business and investment decisions that can lead him to either gain or loss. He is actually exposing himself to risk that can be classified as

(a) Speculative risk.

(b) Fundamental risk.

(c) Pure risk.

(d) Particular risk. ( 1 mark)

Question A5 The steps in risk management process are as follows EXCEPT

(a) Selecting perils.

(b) Identifying risks.

(c) Evaluating risks.

(d) Monitoring risk management process. ( 1 mark)

Question A6

Dato Ariff has withdrawn his cosmetic products from the market to avoid lawsuits arising from the use of the products. He is using risk management tools called

(a) Risk transfer

(b) Risk avoidance

(c) Risk prevention

(d) Risk reduction ( 1 mark)

Question A7 In risk management, when a cost-benefit analysis is conducted, corporation must ensure

(a) The cost is at par with the benefits.

(b) The costs outweigh the benefits.

(c) The benefits outweigh the costs.

(d) The cost-benefit analysis is irrelevant in risk management. ( 1 mark)

Question A8 The following are pre-lost objectives EXCEPT

(a) Economic reasons.

(b) Reducing stress and anxiety.

(c) Adhering to legal requirements.

(d) Corporate Social Responsibility. ( 1 mark)

Question A9

For a corporation, one of the ULTIMATE goals in risk management is

(a) To keep security practice at its best level.

(b) To ensure employees perform their work efficiently.

(c) To ensure properties of the corporation are secured.

(d) To keep financial impact of risks at its minimum level. ( 1 mark)

Question A10

Villegas is a risk manager and is responsible for CONTROLLING the risk management process of the firm he is working with. He needs to do the following EXCEPT:

(a) Measure performance against the standards.

(b) Take corrective actions.

(c) Establish benchmarking standards.

(d) Retention of risks. (1 mark)