Name:     ID: 
 
Email: 

Chapter 16 Risk Management

Multiple Choice
Identify the choice that best completes the statement or answers the question.
 

 1. 

The process of identifying risks that apply to your business and planning how to handle them is called...
a.
Risk Management
c.
Insurale Interest
b.
Economic Planning
d.
BusinessManagement
 

 2. 

All risks are classified as either speculative or...
a.
Natural
c.
Human
b.
Controllable
d.
Pure
 

 3. 

An uninsurable risk is one that...
a.
Cannot be predicted
c.
Is caused by nature
b.
Cannot be avoided
d.
An insurance company will not cover
 

 4. 

The potential of credit not being repaid is...
a.
Debtor-Creditor Relationship
c.
Pure Risk
b.
Credit Risk
d.
Market Risk
 

 5. 

Shoplifting is a type of...
a.
Natural Risk
c.
Human Risk
b.
Market Risk
d.
Economic Risk
 

 6. 

Embezzlement is a form of...
a.
Fraud
c.
Robbery
b.
Burglary
d.
Shoplifting
 

 7. 

An electronic tag on merchandise that sets off an alarm if it is removed from the store is an example of a...
a.
Surveillance System
c.
Security Policy
b.
Theft Deterrent
d.
Safety Program
 

 8. 

One of the rewards of extending credit ot customers is...
a.
Allowing customers to purchase more than they can afford.
b.
Creating cash flow problems for the business.
c.
Building customer loyalty.
d.
Generating business for collection agencies.
 

 9. 

The type of insurance that provides medical and financial support for workers who are injured on the job is...
a.
Business Owners’s Policy Insurance
c.
Employee Health Insurance
b.
Corporate Insurance
d.
Worker’s Compensation
 

 10. 

An agreement that promises to give customers their money back if a product is faulty is a(n)...
a.
Warranty
c.
Insurance Policy
b.
Guarantee
d.
Surety Bond
 

 11. 

Inventory loss due to shoplifting, employee theft, paperwork errors and/or vendor fraud is called...
a.
Shrinkage
c.
Robbery
b.
Burglary
d.
Merchandise Loss
 

 12. 

If a business chooses to self insure, the business is responsible for ___% of the risk.
a.
25%
c.
100%
b.
50%
d.
0%
 

 13. 

Political risk is greatest for companies that..
a.
Participate in the global market
b.
Do not have free trade agreements
c.
Do business with foreign companies that change their import and export policies
d.
All of the above
 

 14. 

An individual who owes money for goods and services received is called...
a.
Debtor
c.
Guarantor
b.
Creditor
d.
Vendor
 

 15. 

An installment loan...
a.
Is a loan paid in regular payments.
c.
Could require collateral.
b.
Is also known as a secured loan.
d.
All of the above.
 

 16. 

A credit application to offer credit to customers in order to check a customer’s..
a.
Family History
c.
Educational History
b.
Financial Background
d.
Family Background
 

 17. 

A three party contract that guarantees one party fulfills its obligation to ascond party, and the third paty makes payment if the obligation is not met is known as...
a.
Surety Bond
c.
Guarantee
b.
Warranty
d.
Fidelity Bond
 

 18. 

The three C’s of Credit do NOT include:
a.
Character
c.
Contract
b.
Capacity
d.
Capital
 

 19. 

A report that shows when customers bills are due as well as how long the accounts have been outstanding is called...
a.
An Accounts Receivable Aging Report
b.
A Credit Report
c.
A Risk Assessment
d.
A Debit Report
 

 20. 

Measures taken to ensure data security include:
a.
Safes and lock boxes
c.
Keys and Pass Codes
b.
Firewalls and strong passwords
d.
None of the above
 

 21. 

A form of risk management that spreads individual risk among a large group in order to reduce the cost of losses to a single member of the group is known as...
a.
Contracts
c.
Insurance
b.
Warranties
d.
Guarantees
 

 22. 

A type of insurance that provides protection for injuries or damage resulting from faulty products.
a.
Product Liability
c.
Professional Liability
b.
General Liability
d.
Business Interruption Insurance
 

 23. 

A type of insurance that provide compensation for loss due to fire, theft or similar disasters that close a business.  This insurance covers loss of income, continuing expenses, and utility expenses.
a.
General Liabillity
c.
Professional Liability
b.
Product Liability
d.
Business Interruption Insurance
 

 24. 

Insurable interest means that the policyholder is at risk of suffering a loss.  In order to be an insurable interest, the insured loss must be...
a.
Measurable
c.
Both A and B
b.
Unexpected
d.
Neither A nor B
 

 25. 

A type of employee insurance that guarantees payment of wages, medical care, and rehabilitation services for employees injured on the job.
a.
Group Health Insurance
c.
Medical Insurance
b.
Worker’s Compensation
d.
Basic Health Insurance
 

 26. 

The continued and regular patronage of a business even when there are other places to purchase the same of similar products is a reward for offering credit to customers commonly known as...
a.
Customer Rewards
c.
Customer Prizes
b.
Customer Risk
d.
Customer Loyalty
 

Matching
 
 
Read the numbered definitions.  Then, choose the correct term from the list that best defines the term.
a.
Burglary
f.
Guarantee
b.
Credit Bureau
g.
Robbery
c.
Credt Report
h.
Shoplifter
d.
Embezzlement
i.
Surety Bond
e.
Fraud
j.
Warranty
 

 27. 

Cheating or deceiving a busienss out of money or property.
 

 28. 

A promise to replace or repair faulty products.
 

 29. 

Breaking into a business to steal money, merchandise, or confidential information.
 

 30. 

Someone trusted with confidential information, financial records, money, or other valuables takes it for personal gain.
 

 31. 

Someone who takes goods from a store without paying for them.
 

 32. 

A private firm that maintains consumer credit data and provides information to businesses for a fee.
 

 33. 

A three party contract that guarantees that one party will fulfill its obligations to a second party.
 

 34. 

Theft involving another person, often through the use of force or violence.
 

 35. 

A record of a company or person’s credit history and financial behavior.
 

 36. 

Apromise to refund money paid for a faulty product.
 
 
Read each or the following definitions or scenarios and determine which type of risk is involved. The answer choices may be used more than once.
a.
Economic Risk
d.
Natural Risk
b.
Human Risk
e.
Political Risk
c.
Market Risk
 

 37. 

Conditions in the United States or other countries may create risk for global businesses.
 

 38. 

The potential for the target market for new goods and/or services to be less than originally thought.
 

 39. 

The San Gabriel river overflowed its banks this past Spring when a storm system moved through the area.  Some businesses suffered flooding and property damage.
 

 40. 

The global pandemic known as CoVid caused many small business to close in parts of the country that were unable to open.
 

 41. 

Situations caused by customers or employees that pose potential risks for theft.
 

 42. 

Negative business conditions cause local and national communities to suffer.
 

 43. 

Evacuations along the coastline pose risks as a hurricane forms in the Gulf of Mexico.
 

 44. 

Identity Theft affects a large number of people who have accounts with a business that just had their databases hacked by criminals.
 

 45. 

A local ice cream shop underestimated how many local citizens would be eating healthier after the new year.
 

 46. 

A business sets strict policies with regards to accepting checks due to a recent increase in checks being written with insufficient funds to cover the checks.
 

 47. 

Wildfires spread across California as local communities evacuate to safer locations.
 

 48. 

Employees are tasked with monitoring the sales floor in hopes of detering a customer from shoplifting.
 

 49. 

If the U.S. falls into a deep recession, people may lose their jobs which will have a negative impact on consumer spending over a long period of time.
 

 50. 

A recent development in the technology industry has caused the demand for bluetooth products to plummet.
 



 
         Start Over