MCQ on Insurance and Risk Management with Answers

MCQ on Insurance and Risk Management with Answers Practice Test for BBA, MBA, Mcom, Bcom, and other Banking & Finance exams


MCQ on Insurance and Risk Management with Answers

1. ___ as the number of exposures increases.
Answer: Objective risk

2. ___ increases the frequency of loss.
a) Peril
b) Subjective risk
c) Hazard
d) Objective risk
Answer: (c)

3. An earthquake happens due to a hazard present. (True/False).
Answer: False

4. ___ hazard increases the probability of loss due to dishonesty or character defects of an insured person.
a) Moral
b) Morale
c) Legal
d) Physical
Answer: (a)

5. ___ has an inherent tendency to amplify the degree of risk.
Answer: Hazard

6. ___ can be assessed.
Answer: Degree of risk

7. In ___ the outcomes can be identified with known probabilities.
Answer: Level 1 (Objective probability)

8. Uncertainty does not exist at level 1 (objective probability). (True/False).
Answer: False

9. The different degrees of uncertainty can be represented on a straight line called ___.
Answer: Continuum

10. ___ risks happen within a stable environment and are constant over an observed period of time.
a) Speculative
b) Pure
c) Dynamic
d) Static
Answer: (d)

11. Which among the following is not a pure risk?
a) Personal risk
b) Property risk
c) Loss of income risk
d) Strategic risk
Answer: (d)

12. The contract of insurance is usually applicable only to pure risks. (True/False).
Answer: True

13. According to the holistic view, risk management must only cover insurable risks. (True / False).
Answer: False

14. In ___ method of identifying risk it is difficult to identify the industry-specific risk, as it is general in nature.
Answer: Questionnaire

15. Evaluating the risk needs to be measured in two dimensions that is ___ and ___.
Answer: Loss frequency, Loss severity

16. Which of the following method reduces the chance of loss to zero?
a) Risk Transferring
b) Risk avoidance
c) Risk retention
d) Risk reduction
Answer: (b)

17. In ___ strategy, risks are retained in a proportion so that the overall risk is reduced.
Answer: Risk combination

18. ___ strategy involves two parties to reduce risk.
Answer: Risk transfer

19. ___ refers to the manner in which the risk control measures that have been implemented shall be financed.
a) Risk financing
b) Risk retention
c) Risk transfer
d) Risk sharing
Answer: (a)

20. ___ finances the loss by retaining the operating revenues and earnings.
Answer: Risk retention

21. ___ is transferred from one entity to another entity in different ways.
Answer: Risk of loss

22. ___ is a process to manage dangerous functions and policies that cause losses to an organization.
Answer: Risk management

23. ___ is the most famous tool of risk management
a) Certainty risk
b) Insurance
c) Loss prevention
d) Uncertainty risk
Answer: (b)

24. ___ is a part of the overall agenda for managing the risk and safety of a construction project.
Answer: Insurance procurement

25. In insurance, the ___ occurs in „excess-of-loss‟ or „stop-loss‟ contracts.
Answer: Pay off

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