CAFM Risk Management Questions and Answers

Question 1

A company determines that the cost of insuring its older, low-value cargo vans against physical damage is higher than the average annual repair cost for minor incidents. The fleet manager cancels the comprehensive and collision coverage on these specific vehicles and allocates funds to a reserve account to pay for any future physical damage out-of-pocket. Which risk management strategy is being implemented?

Accepted Answer

Risk Acceptance

Answer

Risk Acceptance, also known as Risk Retention, is a strategy where a company knowingly and willingly accepts the financial consequences of a potential loss. In this scenario, the company has decided that the cost of transferring the risk to an insurance company is greater than the potential loss itself, so they choose to self-insure by setting aside funds.

Question 2

In the development of a comprehensive fleet risk management program, which of the following is the foundational first step?

Accepted Answer

Identifying and classifying all potential operational and safety risks.

Answer

The risk management process is a systematic sequence. It must begin with the identification and classification of potential risks. Before a risk can be analyzed, treated (e.g., through training or insurance), or monitored, it must first be identified.

Question 3

A fleet manager creates a risk matrix that plots the likelihood of various incidents (e.g., backing collisions, tire failures) against the potential severity of their impact. What is the primary purpose of this type of risk analysis?

Accepted Answer

To prioritize risks for treatment and allocate resources effectively.

Answer

A risk matrix is a tool for risk evaluation and prioritization. By assessing both the likelihood and impact of various risks, a fleet manager can determine which threats are most critical (e.g., high likelihood, high severity) and therefore require the most immediate attention and resources for mitigation.

Question 4

To combat a high number of parking lot and backing-related incidents, a fleet manager mandates the installation of rearview cameras on all new vehicles and implements a mandatory slow-speed maneuvering training course for all drivers. This two-pronged approach is a clear example of which risk management strategy?

Accepted Answer

Risk Reduction

Answer

Risk Reduction, also known as risk mitigation, involves taking active steps to lower the probability or severity of a potential loss. Installing safety technology (cameras) and providing targeted training are direct actions aimed at making these specific types of incidents less likely to occur.

Question 5

Which of the following best defines the legal doctrine of 'vicarious liability' as it applies to a company's fleet operations?

Accepted Answer

The legal responsibility of an employer for the negligent acts of an employee committed within the scope of their employment.

Answer

Vicarious liability holds an employer legally responsible for the wrongful acts of their employees if those acts are committed while performing their job duties. For a fleet, this means the company can be sued and held liable for an accident caused by one of its drivers.

CAFM - Certified Automotive Fleet Manager Practice Test

CAFM - Certified Automotive Fleet Manager Practice Test

CAFM Risk Management Questions and Answers