CGFO Risk Management 3

Question 1

Under the GASB framework, which of the following requires governments to record an insurance liability on their financial statements?

Accepted Answer

Claims that are probable and the amount can be reasonably estimated

Answer

GASB standards require recognition of a claims liability when it is probable that a liability has been incurred and the amount can be reasonably estimated.

Question 2

What is the primary purpose of a 'risk register' in governmental risk management?

Accepted Answer

To document, assess, and monitor identified risks across the organization

Answer

A risk register is a centralized repository that catalogs identified risks along with their likelihood, impact, owners, and mitigation strategies.

Question 3

Which type of government risk pool operates by charging members premiums and paying claims from pooled funds, similar to a commercial insurer?

Accepted Answer

Intergovernmental risk sharing pool

Answer

Intergovernmental risk sharing pools allow multiple government entities to combine their exposures and losses, spreading risk across all members.

Question 4

In risk financing, 'attachment point' refers to:

Accepted Answer

The loss level at which excess insurance coverage begins to pay

Answer

The attachment point is the dollar threshold at which an excess or umbrella policy begins to respond after the underlying coverage or self-insured retention is exhausted.

Question 5

A government's total cost of risk (TCOR) calculation should include all of the following EXCEPT:

Accepted Answer

Projected future tax revenue from insured properties

Answer

TCOR encompasses premiums, retained losses, and risk management administration costs — it does not include revenue projections unrelated to risk financing.

(CGFO) Certified Government Finance Officer Practice Test

(CGFO) Certified Government Finance Officer Practice Test

CGFO Risk Management 3