Question #1 of 5 Question ID: 1281423

In modeling risk frequency, it is common to:

A) use a Poisson distribution.

B) assume risk frequency and severity are the same.

C) assume that risks are highly correlated.

D) use straight-line projection from the most recent loss data.

Question #2 of 5 Question ID: 1281424

Which of the following is not a reason to accumulate loss data?

A) It focuses management attention on the magnitude and e ect of risk.

B) Past losses are almost always repeated in the future.

C) It provides data necessary for empirical analysis.

D) It contributes to the understanding of future expected losses.

Question #3 of 5 Question ID: 1281426

Which of the following is false regarding the use of scorecard data?

A) It is forward looking rather than backward looking.

B) It usually results in higher capital charges than the use of historical data.

C) It is more subjective because it relies upon the judgment of business line managers.

D) It more accurately captures the future bene ts of risk management activities.

Question #4 of 5 Question ID: 1281425

One of the basic requirements of a risk control process that a risk and control self-
assessment program (RCSA) fails in is the:

A) independent veri cation of risk identi cation and measurement.

B) identi cation of expected losses.

C) ongoing assessment of the e ectiveness of risk management activities.

D) expert opinion of managers.

Question #5 of 5 Question ID: 1281427

Scorecards are developed from:

A) random draws from external loss databases.

B) industry standards and guidelines.

C) historical loss data.

D) surveys of the managers of the various business lines.