CGFO Risk Management 2

Question 1

Which risk management strategy involves transferring the financial consequences of a loss to a third party?

Accepted Answer

Risk transfer

Answer

Risk transfer shifts the financial burden of a loss to another party, most commonly through insurance contracts or contractual indemnification clauses.

Question 2

In government risk management, what is an 'exposure' most accurately defined as?

Accepted Answer

The possibility of financial harm from a specific hazard

Answer

An exposure is the condition or situation that creates the possibility of financial loss, such as owning a fleet of vehicles or operating a public pool.

Question 3

A government entity self-insures its workers' compensation program and sets aside funds in a dedicated internal account. This is an example of:

Accepted Answer

Funded risk retention

Answer

Funded risk retention occurs when the entity retains the risk but establishes reserves or a dedicated fund to pay anticipated losses.

Question 4

Which document formally outlines a government's risk management program goals, scope, and authority?

Accepted Answer

Risk management policy statement

Answer

A risk management policy statement establishes the framework, objectives, and organizational authority for the entity's entire risk management program.

Question 5

When a municipality requires contractors to name the city as an 'additional insured' on their liability policy, this is primarily intended to:

Accepted Answer

Provide the city coverage for claims arising from contractor operations

Answer

Additional insured status extends the contractor's liability coverage to the municipality for claims arising out of the contractor's work on behalf of the city.

(CGFO) Certified Government Finance Officer Practice Test

(CGFO) Certified Government Finance Officer Practice Test

CGFO Risk Management 2