CRM Insurance and Financial Risk Flashcards
6 cards from real CRM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CRM Insurance and Financial Risk flashcards as text
What is a 'self-insured retention' (SIR) in a commercial liability policy?
Answer: The amount an insured pays per claim before the insurer responds
An SIR is the amount the insured must pay for each claim before the insurance company begins contributing to the loss.
What does 'total cost of risk' (TCOR) include?
Answer: Insurance premiums, retained losses, risk management costs, and indirect costs
TCOR is a comprehensive measure that includes premiums, retained losses, risk management administrative costs, and indirect costs like lost productivity.
Which of the following best describes 'credit risk' in a financial context?
Answer: The risk that a borrower will fail to meet contractual obligations
Credit risk is the possibility that a counterparty will default on their financial obligation, resulting in a loss for the lender.
What is 'liquidity risk' in financial risk management?
Answer: The risk that an organization cannot meet its short-term financial obligations
Liquidity risk is the danger that an organization will be unable to meet its short-term obligations due to insufficient liquid assets.
What is the primary purpose of risk financing?
Answer: To fund losses that occur and restore the organization to its pre-loss financial position
Risk financing ensures funds are available to pay for losses, allowing the organization to restore itself financially after a risk event.
What distinguishes 'operational risk' from financial risk in enterprise risk management?
Answer: Operational risk arises from failures in internal processes, people, systems, or external events
Operational risk encompasses losses from failed internal processes, human error, systems failures, or external events, distinct from market or credit risk.