Question 1

Workers' compensation covers all of the following losses except: A) medical expenses resulting from a job related injury B) rehabilitation expenses resulting from a job related injury C) lost wages during a disability that results from job related injuries D) medical expenses resulting from an at-home accident

Accepted Answer

Workers' compensation only covers injuries that occur on the job or are related to job duties. An at-home accident would not be covered under workers' compensation.

Question 2

Which of the following is not a tort?
A) Battery
B) Assault
C) Negligence
D) Breaking a contractual agreement

Accepted Answer

Breaking a contractual agreement is a breach of contract, not a tort. A tort is a civil wrong that causes harm or injury to another person, while a breach of contract occurs when one party fails to uphold their contractual obligations to another party. Battery, assault, and negligence are all examples of torts.

Question 3

In a negligence lawsuit, the jury's primary function is to:
A) assist the judge in interpreting the law
B) determine the facts
C) decide guilt or innocence
D) make sure neither plaintiff nor defendant cheats in presenting their case

Accepted Answer

In a negligence lawsuit, the jury's primary function is to determine the facts of the case. The judge is responsible for interpreting the law and instructing the jury on how to apply it to the facts. The jury's role is to listen to all the evidence, consider the credibility of witnesses, and determine what happened in the case. This then allows them to determine the liability and damages in the case.

Question 4

A plaintiff will generally collect for negligence when all the following characteristics are present except: A) injury is suffered by the plaintiff B) plaintiff breaches a contract with the defendant C) breach of duty owed the plaintiff D) the breach of the duty caused the injury to the plaintiff

Accepted Answer

Negligence is a tort and not related to breach of contract. Therefore, the breach of a contract with the defendant is not a necessary characteristic for a plaintiff to collect for negligence. The other three characteristics - injury suffered by the plaintiff, breach of duty owed to the plaintiff, and the breach of duty caused the injury to the plaintiff - are necessary for negligence.

Question 5

Kim's automobile is struck by a negligent motorist. She suffers bodily injuries that cause her to have $73,000 in medical expenses. She is unable to work for several weeks and loses $10,000 in wages. The repair bill to fix her car is $20,000. Choose the true statement from the following answer choices:
A) Her medical bills and lost wages are personal injuries.
B) Her repair bill for her automobile is an example of property damage.
C) Her lost wages are personal injuries, while her medical bills are bodily injuries.
D) ALL of her losses in this scenario are classified as personal injuries, since they were caused by another person.

Accepted Answer

The repair bill for Kim's automobile is an example of property damage, while her medical bills and lost wages are classified as personal injuries. Therefore, option A, C, and D are incorrect.

Question 6

Which of the following is not true about liability risks?
A) Liability risk is where the firm may be legally responsible for the harm it causes to another person.
B) Liability risks are sometimes overlooked due to their intangible nature.
C) Only a breach of contract and criminal acts can lead to liability risk for a firm.
D) A tort can lead to a liability risk.

Accepted Answer

This statement is not true as a tort (civil wrong) can also lead to liability risk for a firm, not just a breach of contract or criminal acts.

Question 7

The "reasonable person" standard changes based upon which one of the following factors?
A) The extent and dollar amount of the injury that occurs
B) The defendant's professional status relative to the event causing the injury
C) The defendant's criminal record
D) The insurer's duty to defend the policyholder

Accepted Answer

The "reasonable person" standard can change based on the defendant's professional status relative to the event causing the injury, as professionals may be held to a higher standard of care specific to their field.

Question 8

In making your personal risk management decisions, which method would be the most feasible and the most economical for handling chipped windshields on your automobile?
A) Avoid (don't drive)
B) Retain (pay for them yourself)
C) Insure (file a claim under your auto insurance)
D) Expose (remove your windshield from your car)

Accepted Answer

This is the most feasible and economical option for handling chipped windshields as it involves simply paying for the repair or replacement out of pocket without involving insurance. It also avoids potential increases in insurance premiums and deductibles that may come with filing a claim. Avoiding driving altogether or removing the windshield (exposing) are not practical solutions, and insuring every small issue can quickly become costly.

Question 9

All of the following legal doctrines result in more individuals being held liable for negligence except: A) last clear chance rule B) contributory negligence C) comparative negligence D) vicarious liability

Accepted Answer

Contributory negligence is a legal doctrine that, if proven, can prevent a plaintiff from recovering any damages if they are found to be even minimally at fault for the incident. This contrasts with the other options, which either allow for the distribution of liability (comparative negligence), hold additional parties liable (vicarious liability), or provide a path to liability in specific circumstances (last clear chance rule).

Question 10

Foster is suing Geraldine and they are in a contributory negligence state. Foster's total injuries are $100,000, and the jury finds that he was 5% at fault in the incident. How much money will Foster be entitled to collect?
A) $100,000
B) $95,000
C) $0
D) $90,000

Accepted Answer

In a contributory negligence state, if the plaintiff (Foster) is found to be at all at fault, even just 5%, he is barred from recovering any damages. Therefore, Foster would be entitled to collect $0.

Question 11

The Big Boy Toy Company's best seller is a futuristic radio-controlled car. The toy is manufactured using a custom mold designed especially for the company by a local artist. If anything were to happen to this mold, the company would have to stop manufacturing the toys until the artist could reproduce the mold. The risk manager's primary concern regarding damage to this mold is probably the:
A) indirect loss that will result while production of the toy is halted
B) expense of paying the artist to reproduce the mold
C) extra cost of manufacturing additional toys while the car cannot be manufactured
D) direct damage to employees that will be laid off while production is halted

Accepted Answer

The risk manager's primary concern regarding damage to this mold is likely the indirect loss that will result while production of the toy is halted. This could lead to a significant decrease in revenue for the company which could have long-term financial implications. The other options (B, C, and D) may also be concerns, but they are not the primary concern in this scenario.

Question 12

Damages awarded to compensate for pain and suffering are called:
A) punitive damages
B) personal injuries
C) non-bodily injury damages
D) exemplary damages

Accepted Answer

Damages awarded to compensate for pain and suffering are called exemplary damages.

Question 13

It is important for a retail store to quickly resume operations after a direct loss primarily because:
A) looting will occur
B) retail merchandise goes out of style quickly
C) most property insurance contracts demand that operations resume immediately, or as soon as possible, after a direct loss
D) customers can be quickly and permanently lost if operations do not continue

Accepted Answer

Quickly resuming operations helps retain customers who might otherwise turn to competitors, leading to permanent loss of business.

Question 14

Which one of the following lists presents the three major categories of "legal liability"?
A) Breach of contract, res ipsa loquitor, torts
B) Criminal wrongs, product liability, intentional interference
C) Torts, breach of contracts, liability without fault
D) Breach of contracts, torts, criminal wrongs

Accepted Answer

The three major categories of legal liability are torts, breach of contracts, and criminal wrongs.

Question 15

Which of the following statements about liability losses is true?
A) They arise from two sources: the obligation to pay legal damages, and the resulting bad publicity.
B) The obligation to pay legal damages is always more expensive than the cost of defense.
C) Defense costs can be expensive, unless the court finds that the plaintiff's claims are groundless.
D) None of the above is true.

Accepted Answer

The statements provided in options A, B, and C are not universally true regarding liability losses. Liability losses can arise from various sources beyond legal obligations and bad publicity, and the cost relationship between legal damages and defense costs can vary significantly depending on the case. Defense costs can also be expensive regardless of the court's findings.

Question 16

To estimate potential property losses, risk managers must know:
A) the accounting book value of property
B) the replacement cost of property
C) the actual cash value of property
D) the original purchase price of property

Accepted Answer

The replacement cost of property is the estimated cost to replace or repair the property in the event of a loss, and is therefore the most appropriate measure for determining potential property losses. The accounting book value, actual cash value, and original purchase price of property do not necessarily reflect the true value of the property and may not provide an accurate estimate of potential losses.

Question 17

All of the following are considered a financial risk handled by financial risk management except: A) currency risk B) liquidity risk C) product marketability risk D) commodity price risk

Accepted Answer

While product marketability is an important consideration for any business, it is not typically considered a financial risk that is managed through financial risk management practices. The other options (currency risk, liquidity risk, and commodity price risk) are all commonly managed through financial risk management strategies.

Question 18

All the following are objectives of risk management except: A) to insure all exposures to loss B) minimize reputation risk C) minimize supply chain interruption D) develop and maintain plant safety program

Accepted Answer

The objective of risk management is not to insure all exposures to loss, but to identify, assess, and manage risks in a way that maximizes the organization's ability to achieve its objectives. The other options listed are legitimate objectives of risk management.

Question 19

Assume Gerald is injured because his landlord, Barbara, fails to replace burned-out light bulbs in the hallway of his apartment building. If Gerald trips and falls and then sues Barbara for his injuries, the basis of his suit most likely will be:
A) negligence
B) intentional interference
C) res ipsa loquitor
D) breach of contract (lease)

Accepted Answer

The most likely basis for Gerald's suit is negligence by the landlord. The landlord had a duty to maintain the hallway in a safe condition for her tenants, and her failure to replace the light bulbs breached that duty, causing injury to Gerald.

Question 20

According to a survey, which of the following is the most challenging risk to manage?
A) Human resource risk
B) Third-party liability
C) Speculative risk
D) Reputation risk

Accepted Answer

Reputation risk is the most challenging risk to manage as it can have a significant impact on an organization's brand, customer loyalty, and financial performance. It is also challenging to quantify and address as it can arise from various factors, including social media, employee behavior, and external events. While human resource risk, third-party liability, and speculative risk are also important risks to manage, reputation risk poses the most significant challenge.

Quiz 2: Risk Identification

Workers' compensation covers all of the following losses except:

Which of the following is not a tort?

In a negligence lawsuit, the jury's primary function is to:

A plaintiff will generally collect for negligence when all the following characteristics are present except:

Which of the following is not true about liability risks?

The "reasonable person" standard changes based upon which one of the following factors?

In making your personal risk management decisions, which method would be the most feasible and the most economical for handling chipped windshields on your automobile?

All of the following legal doctrines result in more individuals being held liable for negligence except:

Foster is suing Geraldine and they are in a contributory negligence state. Foster's total injuries are $100,000, and the jury finds that he was 5% at fault in the incident. How much money will Foster be entitled to collect?

Damages awarded to compensate for pain and suffering are called:

It is important for a retail store to quickly resume operations after a direct loss primarily because:

Which one of the following lists presents the three major categories of "legal liability"?

Which of the following statements about liability losses is true?

To estimate potential property losses, risk managers must know:

All of the following are considered a financial risk handled by financial risk management except:

All the following are objectives of risk management except:

Assume Gerald is injured because his landlord, Barbara, fails to replace burned-out light bulbs in the hallway of his apartment building. If Gerald trips and falls and then sues Barbara for his injuries, the basis of his suit most likely will be:

According to a survey, which of the following is the most challenging risk to manage?