TRIP Risk Management 2

Question 1

Which risk management technique involves transferring the financial consequences of a loss to another party through a contract?

Accepted Answer

Risk transfer

Answer

Risk transfer shifts the financial burden of a potential loss to another party, most commonly through insurance contracts or hold-harmless agreements.

Question 2

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?

Accepted Answer

Loss forecasting using actuarial methods

Answer

Actuarial methods use historical loss data and statistical techniques to forecast future losses, accounting for volatility in transportation liability claims.

Question 3

In the context of transportation risk, a 'retained risk' that is formally funded through a dedicated account is best described as:

Accepted Answer

Funded retention

Answer

Funded retention occurs when a company sets aside specific financial reserves to pay for anticipated retained losses rather than purchasing external insurance.

Question 4

Which component of a risk management program establishes the maximum amount of loss a transportation company is willing to absorb before insurance responds?

Accepted Answer

Retention level

Answer

The retention level defines the threshold of loss the insured accepts responsibility for before transferring risk to an insurer.

Question 5

A trucking firm implements GPS tracking, mandatory rest periods, and driver safety training. These measures are examples of:

Accepted Answer

Loss control

Answer

Loss control encompasses proactive measures designed to reduce the frequency and severity of losses before they occur.

(TRIP) Transportation Risk and Insurance Professional Practice Test

(TRIP) Transportation Risk and Insurance Professional Practice Test

TRIP Risk Management 2