RIMS Risk Control & Mitigation Strategies 3 â Questions and Answers
Question 1: In risk control, 'engineering controls' are considered more reliable than 'administrative controls' because:
- They are less expensive to implement
- They do not depend on human behavior to be effective (Correct answer)
- They are required by OSHA for all industries
- They transfer liability to equipment manufacturers
Correct answer: They do not depend on human behavior to be effective
Engineering controls (e.g., machine guards) function automatically without relying on workers following procedures, making them inherently more reliable.
Question 2: The hierarchy of controls ranks which option as the most effective way to eliminate a hazard?
- Personal protective equipment (PPE)
- Administrative controls
- Elimination (Correct answer)
- Substitution
Correct answer: Elimination
Eliminationâphysically removing the hazardâis ranked highest in the hierarchy because it permanently removes the risk source.
Question 3: Which concept describes the idea that small failures and near-misses indicate systemic weaknesses that can lead to catastrophic events?
- Pareto analysis
- Swiss Cheese Model (Correct answer)
- Monte Carlo simulation
- Value at Risk
Correct answer: Swiss Cheese Model
James Reason's Swiss Cheese Model shows that accidents occur when holes in multiple defensive layers align, each hole representing a latent failure.
Question 4: A risk manager implements a policy requiring dual authorization for large financial transactions. This is best classified as:
- An engineering control
- A substitution control
- An administrative control (Correct answer)
- Personal protective equipment
Correct answer: An administrative control
Dual-authorization policies are administrative controlsâprocedural rules that govern human behavior to reduce the risk of errors or fraud.
Question 5: Which metric is most useful for measuring the effectiveness of a loss prevention program over time?
- Gross written premium
- Incurred loss trend analysis (Correct answer)
- Reinsurance attachment point
- Policy deductible level
Correct answer: Incurred loss trend analysis
Tracking incurred loss trends over time reveals whether prevention efforts are actually reducing the frequency and severity of losses.
Question 6: A retailer places security mirrors in store corners to deter shoplifting. This is an example of which loss control technique?
- Loss reduction
- Deterrence (loss prevention) (Correct answer)
- Risk transfer
- Separation of exposures
Correct answer: Deterrence (loss prevention)
Deterrence measures discourage harmful acts before they occur, making mirrors a loss prevention (pre-loss) tool targeting frequency.
Question 7: When a risk manager uses a fault tree analysis (FTA), the primary goal is to:
- Calculate premium rates for insurance policies
- Identify the combinations of events that could lead to a specific undesired outcome (Correct answer)
- Estimate the market value of insurable assets
- Determine the optimal deductible for a risk retention program
Correct answer: Identify the combinations of events that could lead to a specific undesired outcome
FTA is a top-down, deductive failure analysis that maps out the logical combinations of failures or events that could cause a defined top-level event.
RIMS Risk Control & Mitigation Strategies 3
In risk control, 'engineering controls' are considered more reliable than 'administrative controls' because: