CGFO Risk Management 5

Question 1

A risk manager performs a 'business continuity plan' (BCP) review following a cyberattack on the city's financial systems. What is the PRIMARY goal of the BCP in this context?

Accepted Answer

Ensuring critical government operations can continue or resume quickly after a disruption

Answer

A BCP focuses on maintaining or rapidly restoring essential operations during and after a disruptive event, minimizing the impact on public services.

Question 2

In the context of government fleet management risk, 'frequency' of losses refers to:

Accepted Answer

How often losses occur within a given time period

Answer

Frequency measures how often losses occur and is used alongside severity (the cost per loss) to characterize an entity's overall loss profile.

Question 3

Which risk financing mechanism allows a government to fund losses below the deductible internally while purchasing insurance only for large, infrequent catastrophic losses?

Accepted Answer

Large-deductible insurance program

Answer

A large-deductible program shifts the cost of routine, predictable losses back to the insured entity while the commercial policy responds only to losses exceeding the deductible.

Question 4

Under the Americans with Disabilities Act (ADA), a government's failure to provide accessible facilities creates which type of risk?

Accepted Answer

Pure liability risk

Answer

ADA non-compliance exposes governments to pure liability risk — potential legal judgments, settlements, and mandated remediation costs with no upside possibility.

Question 5

A risk manager is evaluating whether to retain or transfer a low-frequency, high-severity risk. Which factor most strongly supports transferring this risk?

Accepted Answer

The potential loss could be financially catastrophic and destabilize the budget

Answer

When a single loss event could cause catastrophic financial harm — even if rare — transfer via insurance is typically warranted to protect the entity's fiscal stability.

(CGFO) Certified Government Finance Officer Practice Test

(CGFO) Certified Government Finance Officer Practice Test

CGFO Risk Management 5