Types of Risk
A business cannot make its loan payment. What type of risk is this?
What two factors are used to assess a business risk?
What is Likelihood and Impact?
What is the purpose of a contingency plan?
What is to provide a prepared course of action when an unexpected event disrupts normal operations.
A fire damages a company's building and equipment. What insurance would most likely apply?
What is Property Insurance
Purchasing insurance eliminates the risk that something bad will happen.
What is false?
Three employees unexpectedly call out before a busy shift. What is the primary type of risk?
What is Operational Risk?
What formula is used to calculate a risk score?
What is Likelihood × Impact
A company's computers stop working. Which is stronger:
Plan 1 Fix the computers
or
Plan 2 Manager contacts IT, employees activate the backup order process, and customers are notified?
Plan 2 because it identifies specific actions, responsibilities, backup procedures, and communication.
An employee cannot work because of an accident or illness. What insurance provides payments in this situation?
What is Disability Insurance
A company vehicle is damaged in an accident. Identify the primary type of risk and the insurance that could help
Primarily operational risk; Vehicle Insurance.
A customer posts a video complaining about poor service, and it goes viral. What type of risk is this primarily
What is reputational risk?
A risk has a likelihood of 3 and an impact of 4. What is its risk score?
What is 12?
Name three components that should be included in a strong contingency plan.
Disruption, Impact, Immediate Action, Responsibility, Backup Resources, Communication/Recovery.
A customer is injured because of the business's operations and sues. What insurance would most likely apply?
What is liability insurance?
A payment system crashes during the busiest sales period. What should management do first: calculate the risk again or activate its contingency plan?
What is activate the contngency plan
A company's point-of-sale system stops working during its busiest sales period. Identify the primary risk and explain why.
What is Operational Risk because it disrupts normal business operations.
A risk receives a score of 8. What priority level is it?
What is Moderate?
A store loses four employees before a busy Saturday opening. Give two appropriate immediate actions.
contacting available/on-call employees, reassigning responsibilities, prioritizing essential positions, or adjusting nonessential tasks.
A professional is sued for negligence while providing professional services. What insurance would most likely apply?
What is malpractice insurance?
Why should a business have both insurance and a contingency plan?
Insurance can transfer some of the financial impact of certain risks, while a contingency plan tells the business how to respond and recover.
Customers become sick from a company's product and begin posting negative reviews. Identify two types of risk this could create.
What is Reputational and Financial Risk. The business's reputation could be damaged, and it could lose sales/money.
Risk A has Likelihood 5 and Impact 2. Risk B has Likelihood 3 and Impact 5. Which receives the higher risk score? Show both calculations.
Risk A = 10; Risk B = 15. Risk B has the higher risk score.
Explain the difference between risk assessment and a contingency plan
Risk assessment determines what could happen and evaluates its likelihood/impact; a contingency plan explains what the business will do if the disruption occurs.
A competitor introduces a better product that makes the company's product outdated. What type of insurance should the company use?
What is a noninsurable risk?
A water pipe bursts and forces half of a retail store to close. Identify the primary risk, give one immediate action, name one backup resource, and identify insurance that could potentially protect covered business property.
Operational risk; responses may include closing/securing the affected area and contacting maintenance/emergency services; backup could include an alternate workspace/area; Property Insurance could potentially cover covered property losses.