RIMS CRM PRACTICE TEST
EXAM PREP CANADA 210
QUESTIONS
Question 1: Which statement best describes risk in a modern enterprise risk
management context?
Choices:
1) The e�ect of uncertainty on objectives 2) Only the chance of an accidental loss 3) Any event that is fully predictable 4) Only risks that can be insured
Correct Answer: The e�ect of uncertainty on objectives
Explanation: Risk is tied to uncertainty and objectives and can include both adverse and favourable e�ects. It is broader than insurable hazard risk.Page 1
Question 2: A �re can produce a loss or no loss but no gain. How is this risk most appropriately classi�ed?
Choices:
1) Speculative risk 2) Pure or hazard risk 3) Strategic opportunity 4) Financial arbitrage
Correct Answer: Pure or hazard risk
Explanation: Pure or hazard risk involves the possibility of loss or no loss, with no possibility of gain from the event itself.Question 3: Entering a new market could produce a gain, no change, or a loss. What type of risk is this?
Choices:
1) Pure risk 2) Hazard risk only 3) Speculative risk 4) Static risk
Correct Answer: Speculative risk
Explanation: Speculative risk includes the possibility of gain as well as loss or no change, which is typical of business and strategic decisions.Page 2
Question 4: What is a peril?
Choices:
1) A condition that increases the chance of loss 2) The amount retained by the organization 3) A risk-reporting metric 4) The direct cause of a loss
Correct Answer: The direct cause of a loss
Explanation: A peril is the direct cause of loss, such as �re, theft, or windstorm. A hazard is a condition that increases the likelihood or severity of loss.Question 5: Combustible material stored beside an electrical panel is best described as what?
Choices:
1) A hazard 2) A peril 3) A claim 4) A deductible
Correct Answer: A hazard
Explanation: The combustible material increases the chance or severity of a �re loss, so it is a hazard rather than the peril itself.Page 3