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Business Management and Law, Chapter 11: Risk Management
- 1.No matter how carefully you plan, you cannot avoid all risk.
- A.
True
- B.
False
- 2.A company can reduce international business risk by offering a wide range of products.
- A.
True
- B.
False
- 3.Piracy is the illegal copying of software packages or information.
- A.
True
- B.
False
- 4.Insurance exchanges the uncertainty of a possible large financial loss for a certain smaller payment.
- A.
True
- B.
False
- 5.Companies should always insure against all risks, no matter how unlikely they are.
- A.
True
- B.
False
- 6.Insurance companies also function as investment companies.
- A.
True
- B.
False
- 7.Not all insurance agents work for an insurance company.
- A.
True
- B.
False
- 8.Commercial property insurance provides compensation for ongoing business expenses that occur if a business has a temporary shutdown due to a fire, flood or other major problem.
- A.
True
- B.
False
- 9.If a company cannot afford the cost of insurance protection, it simply must go out of business.
- A.
True
- B.
False
- 10.Counterfeiting refers to the illegal use of intellectual property, whether it is in the form of a patent, trademark, or copyright.
- A.
True
- B.
False
- 11.Business interruption insurance
- A.
Covers property losses resulting from fire, storms, and theft
- B.
Provides compensation for ongoing business expenses that occur if a business has a temporary shutdown due to a fire, flood or other major problem.
- C.
Provides payments to employees who can not work due to illness or injury
- D.
Protects against losses from injury to people or property resulting from a company's products, services or actions.
- 12.A risk that relates to harm or injury to other people or their property because of your actions is called
- A.
Personal risk
- B.
Property risk
- C.
Liability risk
- D.
Speculative risk
- 13.The person or company buying an insurance policy.
- A.
Policyholder
- B.
Agent
- C.
Beneficiary
- D.
Insured
- 14.A policyholder's request for payment for a loss covered by an insurance policy is a
- A.
Claim.
- B.
Premium.
- C.
Deductible.
- D.
Fraud.
- 15.A risk that can result in damage to your own health or well-being is called
- A.
Personal risk.
- B.
Property risk.
- C.
Pure risk.
- D.
Liability risk.
- 16.The person or company for which the insurer assumes the risk is the
- A.
Insured.
- B.
Beneficiary.
- C.
Policyholder.
- D.
Agent.
- 17.A risk that presents the chance for loss but no opportunity for gain is a
- A.
Speculative risk.
- B.
Pure risk.
- C.
Non-economic risk.
- D.
Liability risk.
- 18.The exclusive right to possess, use and dispose of property and its profits.
- A.
Property rights
- B.
Patent rights
- C.
Copyright
- D.
Civil rights
- 19.A risk that can lead to loss of items such as money, vehicles and buildings.
- A.
Property risk
- B.
Personal risk
- C.
Liability risk
- D.
Speculative risk
- 20.The amount a policyholder pays for insurance coverage.
- A.
Premium
- B.
Claim
- C.
Benefits
- D.
Liability
- 21.A risk that offers a chance to either gain or lose.
- A.
Speculative risk
- B.
Pure risk
- C.
Personal risk
- D.
Controllable risk
- 22.Personal, liability and property risks are all examples of
- A.
Uninsurable risks
- B.
Economic risks
- C.
Speculative risks
- D.
Non-economic risks
- 23.Shrinkage is
- A.
Loss of inventory due to shoplifting, employee theft, or other sources.
- B.
Loss of profits due to a poor business climate.
- C.
Loss of employees to other companies which offer better pay and benefits.
- D.
Loss of ownership share due to stock sales.
- 24.The actual loss for a business from theft is
- A.
The price the business paid for the product.
- B.
The retail price of the product.
- C.
The profit that would have been made on the product.
- D.
The amount the insurance company will pay for the item.
- 25.Which of these actions encourages employee theft?
- A.
Ensuring employees are satisfied with their jobs
- B.
Allow employees to process transactions between themselves and the company
- C.
Prohibit employees from making copies of any business-related keys
- D.
Empty cash registers on a regular basis, or whenever they have more than a set level of cash
- 26.What is the most important action a business can take to reduce employee theft?
- A.
Use careful hiring procedures
- B.
Place security cameras in storage areas
- C.
Set up a bounty system to reward employees for reporting their coworkers
- D.
Immediately fire and prosecute those found to be stealing
- 27.The main source of loss in American businesses is
- A.
Employee theft.
- B.
Shoplifting.
- C.
Poor inventory management.
- D.
Insurance fraud.
- 28.Which of these tends to reduce losses from bad checks?
- A.
Require that the customer's name, address and phone number are pre-printed on the check
- B.
Accepting checks with a check number lower than 300
- C.
Giving cash back for checks written in an amount above the purchase price
- D.
Accepting checks that are from out-of-state banks
- 29.Which of these is an effective method of preventing or reducing loss due to burglary and robbery?
- A.
Keeping records of key distribution
- B.
Ensuring each lock is fitted properly for the door
- C.
Keeping a minimum amount of cash on hand by making frequent bank deposits
- D.
Storing more expensive items in harder-to-reach places
- E.
Focus strictly on conducting business, regardless of your surroundings
- F.
Prohibiting employees from copying work keys
- G.
Keeping the same door locks regardless of employee turnover
- 30.Which of these is NOT an effective method of preventing or reducing accidents?
- A.
Planning for non-occurrence of accidents
- B.
Properly training employees
- C.
Safe building and facility design
- D.
Trimming trees and bushes
- 31.Which of these types of insurance will pay expenses while a business has to shut down due to a flood or fire?
- A.
Business interruption insurance
- B.
Commercial property insurance
- C.
Workers' compensation insurance
- D.
Business disability insurance
- 32.A risk that you cannot reduce the probability of loss occurring or the amount of loss if it does occur is known as a( n) _________
- A.
Pure risk.
- B.
Uninsurable risk.
- C.
Uncontrollable risk.
- D.
Non-economic risk.
- 33.Which of these is NOT a common type of insurance on a business?
- A.
Health insurance
- B.
General liability insurance
- C.
Professional liability insurance
- D.
Business interruption insurance
- 34.Which of these is NOT a common category of items covered by business insurance?
- A.
Profits
- B.
Personnel
- C.
Business operations
- D.
Property
- 35.You decide to cancel your trip to the beach because a hurricane is forecast to hit the area. This is an example of
- A.
Insuring risk
- B.
Transferring risk
- C.
Assuming risk
- D.
Avoiding risk
- 36.Finding someone else to complete a risky activity is known as _______.
- A.
Insuring risk
- B.
Transferring risk
- C.
Assuming risk
- D.
Avoiding risk
- 37.The party that agrees to take on certain economic risks and to pay for losses if they occur is the
- A.
Insurer.
- B.
Policyholder.
- C.
Assignee.
- D.
Beneficiary.
- 38.All of the following are types of insurance a business might purchase to protect its employees EXCEPT
- A.
Health insurance.
- B.
Disability insurance.
- C.
Liability insurance.
- D.
Life insurance.
- 39.This type of insurance covers a large number of employees and their family members under one policy.
- A.
Group insurance
- B.
Business interruption insurance
- C.
Workers' compensation insurance
- D.
Liability insurance
- 40.Which of the following circumstances can lead to costly, uninsurable business risks?
- A.
Technology changes
- B.
Consumer demand
- C.
Competitors' actions
- D.
Changing laws or political climates
- E.
Changing culture
- F.
Mistreatment of employees
- G.
Performing dangerous work, such as mining, construction, or demolition
- 41.Which of these does NOT help a business manage uninsurable risks?
- A.
Study all of the risk areas
- B.
Calm employees by telling them that all risks are insured (even if they're not).
- C.
Practice careful hiring policies
- D.
Be active in the local community
- 42.What is the limit for claims in small claims court in Florida?
- A.
$5,000
- B.
$75,000
- C.
$15,000
- D.
$500
- 43.Which of these is a legal way to reduce shoplifting?
- A.
Security cameras in generally accessible areas
- B.
Security cameras in dressing rooms
- C.
Booby traps to injure or kill shoplifters
- D.
Posting pictures of suspected shoplifters in public.
- 44.By opening a business to the public, an enterpreneur owes a duty of care to
- A.
All of these.
- B.
His employees.
- C.
His customers.
- D.
People who come and browse, but have no plans to buy.
- E.
Vendors.
- 45.The Consumer Product Safety Commission seeks to protect people from
- A.
Unreasonable risks of injury or death associated with the use of consumer products.
- B.
Increasing consumer prices.
- C.
Decreasing value of products.
- D.
All risks of injury or death.
- 46.Business laws and regulations tend to
- A.
Be written in response to a recent occurrence.
- B.
Be written in anticipation of a future occurrence.
- C.
Not be related to real-world events.
- D.
Be written with the best interests of business in mind.
- 47.Which of these is NOT required of a negotiable instrument?
- A.
It must state a specific person to whom payment is to be made.
- B.
It must be in writing and signed by the maker.
- C.
It must contain an unconditional promise to pay.
- D.
It must be payable on demand or at a certain time.
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