Risk management has evolved from which of the following?

Operations research.
Decision theory.
Insurance
management.
Management science.

Incorrect. This choice is not relevant.

Incorrect. This choice is not relevant.
Correct. Risk management has evolved from insurance management. The
strategic factor in the transition from insurance management to risk
management was the evolution of decision theory, operations research, and
management science disciplines. The other choices use a scientific approach
to decision making. Decision theory provides a basis for judging the goodness
or badness of decisions before the outcome is known. Decision theory has its
roots in operations research and management science (IIA Standard 2120—
Risk Management).
Incorrect. Refer to the correct answer.

Which of the following is not a legal tool for derisking?

Hold-harmless
agreements
New contracts
Recontracting
Risk shifting
Incorrect. Hold-harmless agreements mean risk is lessened (derisked) due to
a previous agreement. This is a legal tool for derisking.
Incorrect. New contracts can be drawn to reduce risks. This is a legal tool for
derisking.
Incorrect. Existing contracts can be canceled and recontracted with
modifications. This is a legal tool for derisking.
Correct. Risk shifting is risk transferring from one party to another, but the risk
still remains. This is not a legal tool for derisking.

The method by which a company exists and describes the basic terms of its existence is
called which of the following?
Corporate
governance.
Corporate charter.
Corporate ownership.
Corporate ethics.
Incorrect. Corporate governance takes its powers and responsibilities from the
corporate charter.
Correct. The method by which a firm is governed, directed, administered, or
controlled and the goals for which it is being governed are based on the
corporate charter. The hierarchy of a corporation's authority starts with the
state charter, then flows to shareholders, the board of directors, management,
and finally employees. The charter, which is an internal document, describes
the basic purpose of a corporation's existence in terms of mission, vision,
goals, objectives, and authority.
Incorrect. Corporate ownership takes its powers and responsibilities from the
corporate charter, bylaws, and articles of incorporation filed with the state
government. It deals with the rights and responsibilities of investors and
owners (IIA Standard 2110—Governance).
Incorrect. Corporate ethics takes its powers and responsibilities from the
corporate charter.