Chapter 14

Question 1

Risk

Answer 1

is the possibility of loss, damage, or injury

Question 2

Natural risk

Answer 2

is a situation caused by
acts of nature

Question 3

Economic risk

Answer 3

is a situation that occurs when business activities suffer due to changes in the US or world economy

Question 4

Market risk

Answer 4

is the potential that the target market for new goods or
services are much less than originally projected

Question 5

Human risk

Answer 5

is a negative situation
caused by the actions of people

Question 6

risk management

Answer 6

is the process of evaluating risk and finding ways to minimize or manage loss

Question 7

controllable risks

Answer 7

are situations that cannot be avoided, but can be minimized by purchasing insurance or creating a risk management plan

Question 8

Uncontrollable risks

Answer 8

are situations that cannot be predicted or covered by purchasing insurance

Question 9

Pure risk

Answer 9

is a risk with a possibility of
loss, but no possibility of gain

Question 10

Speculative risk

Answer 10

is a risk that can result in either financial gain or financial loss

Question 11

Insurance

Answer 11

is a financial service used to
protect against loss

Question 12

Uninsurable risk

Answer 12

is one that an insurance
company will not cover

Question 13

Insurance policy

Answer 13

defines the type of losses
that are covered, amount of coverage in dollars, and other conditions to which the two
parties agree

Question 14

Premium

Answer 14

Amount insured pays for insurance coverage

Question 15

Claim

Answer 15

Process of documenting a loss
against an insurance policy

Question 16

Deductible

Answer 16

Amount the insured is responsible for paying when a claim is made

Question 17

Cyber insurance

Answer 17

covers loss incurred from cyberattacks, such as data
breaches and computer viruses

Question 18

General liability insurance

Answer 18

protects against financial losses that result from
legal issues

Question 19

Product liability insurace

Answer 19

protects against financial losses due to a product
defect that may cause injury to the user of the product

Question 20

Professional liability insurance

Answer 20

protects service-based businesses from financial
losses caused by errors and negligence in how a service is provided

Question 21

Liability insurance

Answer 21

covers financial losses caused by the actions or negligence of a person or business

Question 22

Business interruption insurance

Answer 22

covers lost income and expenses caused by a property damage loss

Question 23

Fidelity bond

Answer 23

cover financial, and property losses caused by employee actions

Question 24

Directors and officers insurance

Answer 24

covers financial losses
caused by company’s executive officers

Question 25

Data breach insurance

Answer 25

covers legal fees and financial losses sustained when a company’s data files are accessed without permission

Question 26

Property insurance

Answer 26

covers losses and damage to the assets of a business caused by a variety of events, such as floods, fire, smoke, and vandalism

Question 27

Workers compensation insurance

Answer 27

covers medical expenses and lost wages for employees injured at work

Question 28

Unemployment insurance is

Answer 28

provides specific benefits to workers who lose their jobs through no fault of their own

Question 29

Disability insurance

Answer 29

provides some income to employees who become sick or injured due to a nonwork related event or condition