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Exam 22: Bonus B: Managing Risk

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Question 41

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________ insurance guarantees payment of wages,medical care,and rehabilitation services for employees who are injured on the job.

A) Product liability
B) Workers' compensation
C) Professional liability
D) Malpractice

E) B) and C)
F) All of the above

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Question 42

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Most homeowners' insurance policies automatically provide adequate coverage for small home-based businesses.

A) True
B) False

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Question 43

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Risk management for business is critical due in part to:

Two desirable features of _______ are that members do not receive bills and do not have to fill out claim forms.

An example of an uninsurable risk would be the potential losses suffered by Domino's Pizza resulting from a popular new product from Pizza Hut.

An entrepreneur takes a speculative risk when starting a new business.

Worldwide risks need to be prioritized so that international funds can be spent where they can do the most good.

Explain the benefits of workers' compensation.Who is required to carry this type of insurance?

Health maintenance organizations put an emphasis on helping members stay healthy instead of on treating illnesses.

Preferred Provider Organizations (PPOs)offer medical care that is usually more expensive than HMOs.

Cary owns a life insurance policy on her husband Jay through Mutual of Cincinnati Life Insurance Company.As a policyholder,she also owns part of the company.

Enterprise risk management is:

Amusement parks often have a minimum height restriction on some of their most thrilling rides.This risk management strategy is done in an effort to:

Typically,the only option that firms have to deal with pure risk is to buy insurance.

Firestone and Ford recalled thousands of tires when several people died in traffic accidents blamed on faulty tires.This is an example of which of the following?

An enterprise risk management (ERM)program has a goal of defining which risks the program will manage.

_________ are tax-deferred accounts that allow people to save money for medical costs such as prescription drugs,office visits,and routine medical procedures.

"Going bare" is a much less risky strategy for self-insurance.

Hector had been asked to serve on the board of a major pharmaceutical firm.He reluctantly declined,citing the firm's lack of liability coverage for outside members of the board of directors.Hector's decision indicates that he:

Mini-Case The Bookworm is a bookstore and café located on a busy downtown main street in Denver.The owner,Waata Reader prides himself on the vast selection of books available in the shop.The store has three stories,with both stairs and an elevator to each level.In the back of the first floor is the café,which serves sweets and coffee drinks.Many times customers will linger there over a cup of coffee,deciding which book to purchase.Waata has expanded several times and now he has 22 people on the staff of the current,larger store. -When one of Waata's employees was stocking a particularly high shelf one morning he reached a bit too far and fell off the ladder.Luckily he just broke his arm and returned to work later that day.His medical bills due to this accident were covered under: