Section A Instructions: Select the correct response, by highlighting or using bold feature. 1. A moral hazard is aan) a. Careless driver b. A person who suffers an exaggerated case of whiplash following an automobile accident c. Worker who occasionally leaves a dangerous machine unattended to talk to friends d. Worker who occasionally embezzles money 2. The term used to describe a specific contingency that may cause a loss is referred to as a. Hazard b. Peril C. Risk d. Chance of loss 3. Which of the following consists of the possibility of the loss of income or assets as a result of loss of the ability to earn income a. Personal risk b. Property risk C. Liability risk d. Life risk a: 4. Which of the following is/are not physical hazards? a. The existence of dry forests (hazard for fire) b. Earth faults (hazard for earthquakes) C. Icebergs (hazard to ocean shipping) d. Accident-prone person e. None 5. Which of the following stems from the mental attitude of the insured? a. Physical hazard b. Moral hazard C. Morale hazard d. All 6. Which of the following risks results from change in the economy? a. Static risk b. Non-financial risk c. Financial risks d. Dynamic risks 7. Which of the following is not the importance of risk management? a. Proper risk management enables a business firm to handle its exposure to accidental losses in the economic and effective way. b. It enables companies to react in early stage of change in environment and avoiding possible crises. c. It enables a business firm to handle better its ordinary business risk. d. It contributes to the survival and profitability of a business e. All f. None 8. means that after a loss occurs, the firm can at least restart partial operation within some reasonable time period if it chooses to do so. a. Survival b. Continuity of operations c. Earnings stability d. Continued growth e Social responsibility 9. The correct sequence of risk management is: a. Risk identification - risk measurement - selecting the appropriate technique - administrating the risk management program b. Risk measurement - risk identification - electing the appropriate technique - administrating the risk management program C. Risk measurement - risk identification - administrating the risk management program - selecting the appropriate technique d. Risk identification - risk measurement - administrating the risk management program - selecting the appropriate technique is the process by which a business systematically and continuously identifies property. liability, and personnel exposures as soon as or before they emerge. 10. a Risk measurement b.Selecting the appropriate technique for handling losses C. Risk identification d. Implementing and administrating the risk management program 2 11. provided a listing of all the various policies or types of insurance that may be needed by a business. a. Loss exposure checklists b. Insurance policy checklists c. Risk analysis questionnaires d. Flow charts 12. Company-owned vehicles provided to directors, executives or employees for business and personal use? If so, to what extent? This is an example of: a. Loss Exposure Checklists b. Risk Analysis Questionnaires C. Flow charts d. Analysis of financial statements e. Inspection of the firm's operation 13. Which of the following is risk financing technique? a. Avoidance b. Loss control c. Separation/diversification d. Self-insurance e. Combination (pooling) 14. The rule of res ipsa loquitur means the thing: a. Speaks for itself b. Refers for the offender C. Refers for the defender d. Refers for the insured