Risk Management Flashcards
7 cards from real TRIP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Risk Management flashcards as text
Which risk management technique involves transferring the financial consequences of a loss to another party through a contract?
Answer: Risk transfer
Risk transfer shifts the financial burden of a potential loss to another party, most commonly through insurance contracts or hold-harmless agreements.
A transportation company discovers that its auto liability losses fluctuate significantly year to year. Which risk management tool is best suited to predict future losses?
Answer: Loss forecasting using actuarial methods
Actuarial methods use historical loss data and statistical techniques to forecast future losses, accounting for volatility in transportation liability claims.
In the context of transportation risk, a 'retained risk' that is formally funded through a dedicated account is best described as:
Answer: Funded retention
Funded retention occurs when a company sets aside specific financial reserves to pay for anticipated retained losses rather than purchasing external insurance.
Which component of a risk management program establishes the maximum amount of loss a transportation company is willing to absorb before insurance responds?
Answer: Retention level
The retention level defines the threshold of loss the insured accepts responsibility for before transferring risk to an insurer.
A trucking firm implements GPS tracking, mandatory rest periods, and driver safety training. These measures are examples of:
Answer: Loss control
Loss control encompasses proactive measures designed to reduce the frequency and severity of losses before they occur.
The process of systematically identifying all potential exposures a transportation company faces before selecting risk management strategies is called:
Answer: Exposure identification
Exposure identification is the foundational step in risk management that catalogs all assets, activities, and liabilities that could result in financial loss.
When a transportation company uses a high deductible policy with a large self-insured retention, the primary benefit compared to guaranteed-cost insurance is:
Answer: Improved cash flow and potential cost savings if losses are low
High-deductible programs reduce upfront premiums and allow companies with good loss experience to retain savings, improving cash flow compared to fully-insured programs.