Portfolio Management & Strategy Flashcards
7 cards from real RIMS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Portfolio Management & Strategy flashcards as text
A risk manager benchmarks the organization's TCOR against industry peers primarily to:
Answer: Identify whether the current risk portfolio strategy is cost-effective relative to comparable organizations
Benchmarking TCOR against peers reveals whether the organization's risk financing costs are competitive and whether strategic adjustments are warranted.
In a 'parametric' insurance product used within a risk portfolio strategy, indemnification is triggered by:
Answer: A predefined index or measurable event parameter reaching a specified threshold
Parametric insurance pays when a measurable trigger (e.g., earthquake magnitude, wind speed, rainfall index) hits a defined threshold, regardless of actual losses incurred.
Which of the following best represents a 'top-down' approach to building an enterprise risk portfolio?
Answer: Senior leadership defines strategic risk priorities first, then aligns business-unit risks to that framework
A top-down approach starts with strategic objectives set by leadership, then cascades risk priorities and appetite to business units for alignment and execution.
The primary purpose of a 'risk register' within portfolio management is to:
Answer: Serve as a centralized inventory of identified risks with assessments, ownership, and mitigation status
A risk register is the master record of identified risks, including their likelihood, impact ratings, risk owners, and current mitigation or treatment status.
When a risk manager proposes increasing the organization's deductible from $250,000 to $1,000,000, the key portfolio analysis required is:
Answer: Modeling expected retained losses and cash flow impact at the higher deductible against premium savings
The analysis must compare expected retained loss costs and cash flow volatility at the higher deductible against the premium reduction to determine if the strategy improves TCOR.
Reinsurance is used in risk portfolio strategy primarily to:
Answer: Allow primary insurers to transfer a portion of their risk to another insurer, reducing exposure concentration
Reinsurance allows primary insurers to cede portions of their risk portfolio to reinsurers, managing capacity constraints, capital requirements, and catastrophic loss exposure.
A risk manager conducting a 'stress test' on the organization's risk portfolio is attempting to:
Answer: Evaluate how the portfolio would perform under extreme but plausible adverse scenarios
Stress testing subjects the risk portfolio to severe hypothetical scenarios to identify vulnerabilities, test resilience, and ensure the financing structure can withstand extreme events.