ESB Risk Management 2

Question 1

Which of the following is the FIRST step in a formal risk management process?

Accepted Answer

Identify and assess potential risks

Answer

Implement risk controls

Answer

Transfer risk to insurers

Answer

Monitor existing risks

Question 2

A small retailer installs a sprinkler system and fire extinguishers to reduce potential fire damage. This is an example of:

Accepted Answer

Risk reduction

Answer

Risk transfer

Answer

Risk avoidance

Answer

Risk acceptance

Question 3

What is 'speculative risk' in entrepreneurship?

Accepted Answer

Risk that can result in loss, gain, or no change

Answer

Risk that only results in harm or status quo

Answer

Risk associated exclusively with product liability

Answer

Risk that cannot be insured against

Question 4

A small business uses a SWOT analysis partly to:

Accepted Answer

Identify internal and external risks alongside opportunities

Answer

File annual tax returns

Answer

Calculate break-even points

Answer

Hire qualified employees

Question 5

Which type of insurance specifically protects a small business owner if a client claims that professional advice caused them financial harm?

Accepted Answer

Professional liability (errors & omissions) insurance

Answer

General liability insurance

Answer

Workers' compensation insurance

Answer

Property insurance

Question 6

An entrepreneur signs a contract requiring a supplier to carry its own liability insurance for delivery accidents. This risk management technique is called:

Accepted Answer

Contractual risk transfer

Answer

Risk retention

Answer

Risk avoidance

Answer

Risk pooling

Question 7

What does a risk matrix help a small business owner do?

Accepted Answer

Prioritize risks based on likelihood and potential impact

Answer

Calculate the exact cost of each risk

Answer

Automate insurance claim filing

Answer

Determine employee benefit packages