RMI TEST 2

Which investigative body concluded that BP endangered workers to cut costs?

US Chemical Safety & Hazard Investigation Board (CSB)

In "From Superstorms to Factory Fires", what was Ford able to do using the model described in the article?

Using the model, Ford was able to identify the supplier sites that required no special risk-management attention.

Which of the following is not described in "Strategy, Risk, and the Global Financial Crisis?" as being part of the "constellation" of forces responsible for the blurring of traditional industry lines?

interest from investors

BMW went one step beyond "Just in time" delivery on its supply chain to:

just in sequence

Punitive damages are associated with which risk category?

liability

Which of the following is not a main bias we encounter when developing models?

location bias

In the case discussed in class, we identified some overriding themes. Which of the following was NOT one of the overriding themes?

managerial efficiency

gender bias

men take more risk

In efforts to rebrand BP, growth was attained through which of the following methods?

mergers and acquisitions

financial incentives

most incentives -motivated by money

coercive

negative reinforcement -taking away something

The reading on behavioral analytics discussed the possibility of fraud can be within which of the following categories?

operational

Which of the following was not identified as a primary cause of BP's March 2005 accident?

overworking employees

A sailboat is an example of:

personal property

Which of the following do I not consider to be its own category of organizational risk?

reputational

Strategy should help an organization be more _____________.

resilient

A lower cost of capital suggests an alternative is:

safer

Which category probably faces the largest financial impact from premature death?

single wage earning adult with dependents

What types of alternative fuels did BP pursue after Browne became CEO in 1995?

solar

Which of the following is NOT an internal source of operational risk?

stock market volatility

Sally desperately wants to open her own nail salon. She decides to open on the north side of town, which she did not realize receives relatively little traffic. Which category would this error fit under?

strategic

Product mix is typically associated with which risk category?

strategic risk

In support of "smart" pills, Joshua Gowin introduces an anecdote of which historical event to illustrate the positive power of cognitive enhancers?

the French Revolution

Which of the following provides the clearest description of time to recovery (TTR)?

the time it would take for a particular node to be restored to full functionality after a disruption

The skill of critical decision making requires an understanding of:

the trade-off between risk and reward

Which of the following is not an example of PI (performance impact)?

unemployment rate

What type of integration best describes the type of organization BP is?

vertical

Causes of liability include:

violations of statutory laws violations of contract terms negligent behavior

In which age category do you face the highest risk of premature death?

your 40's

moral incentives

"do the right thing"

media bias

"im going to die of a terrorist attack"

BIAS- Donald Rumsfeld (secretary of defense to George W. Bush)

"there are the known knowns. these are the things we know. there are the known unknowns. That is to say, there are things we dont know. but there are also the unknown unknowns. these are the things we known we dont know"

Which part of Secretary of State Donald Rumsfeld's quote poses the most threat to analyzing and creating decision-making models?

"unknown unknowns"

types of bias

-age bias -cultural bias -experience bias -gender bias -media bias

how do you use the "reward" amount

-cost/benefit analysis -projected cash flows -discount back to present value -determine optimal choice

cultural bias

-different cultures do thing different

efficient frontier

-each dot represents a portfolio -The dots that are closest to the efficient frontier line are the portfolios that are expected to show the are expected to show the best performance w the smallest risk -x axis is risk/volatility -y axis is expected return

capital asset pricing model

-expecting return on investment depends on risk rate and how my stocks moves with the market

types of incentives

-financial -moral -natural -coercive -personal vs social

incentives

-how do we get them to make decisions that are advantageous to us -things that motivate individuals to perform an action -can be at the individual, organizational or societal level

At which level are incentives found?

-individual, organizational and societal

OSHA focuses on personnel safety while process safety focuses on the prevention of which of the following?

-leaks in hazardous production processes -fires

risk/reward --government and society

-measuring reward to society is difficult -many time gov is the only entity able to take on risk, regardless of reward

Business risk can encompass which of the following?

-operational -hazard -strategic

political incentives

-short term v long term -discount rates

It is not easy to determine what additional reward is necessary for governments or society to take additional risk because:

-sometimes governments are the only entity with the ability to take certain risks -the social benefits of some risks are difficult to measure

incentives

-study of economics if basically a study of incentive systems -beware of "law of unintended consequences" --ex for food stamps people want to have more kids that way they get more from the gov

bias

-subjective view/probability- different from objective -many sources -alternate decision making -problem when it ends up being significantly different from the model

organizations

-use EXPECTED VALUE -no natural risk aversion -opportunity cost/cost of capital -most organizations predict future cash flows from investments/opportunities -discount those cash flows back to present value based an cost of capital

individuals measure risk and reward...

-using EXPECTED UTILITY -ask how much reward is necessary to induce you to take risk? -how much are you willing to pay to avoid risk (insurance) -ex $5, or 50/50 chance of either getting $1 or $9

age bias

-younger people take on more risk

According to the reading on behavioral analytics, what percentage of business loss can be attributed to operational risk?

30%

Which of the following is not true about REI scores?

REI scores help determine macroeconomic effects of monetary policy.

According to Joshua Gowin's article, some university surveys have shown that up to 35% of students have obtained which two drugs as a study aid?

Adderall and Ritalin

Which of the following are elements of a loss exposure: I. asset exposed to loss II. cause of loss III. financial consequences of loss

All of the above are elements of a loss exposure

Which of the following is NOT one of the five main catogories of risk faced by individuals?

Reputational

Eric must keep a B average, or else lose his starting position on the basketball team. What type of incentive best describes this situation?

Coercive

Which of the following is a way organizations utilize opportunity cost in their calculations?

Discounting

What field basically studies incentive systems?

Economics

Individuals and organizations measure risk/return with expected utility.

False

Which entity is most likely to take additional risk without regard to the amount of reward associated with it?

Governments

______________ focused on "Strategic Risk management" which involved taking opportunistic risks.

Harley-Davidson

____________ was highly exposed to economic variability and recessions.

Haverty's Furniture

Individual risk evaluations require an analysis of: I. Severity II. Frequency III. Seasonality

I & II -severity and frequency

The financial consequences of property risks include: I. reduction in property value II. increases in expenses III. lost salary

I and II -reduction in property value and increases in expenses

What motivates an individual to make perform an action?

Incentive

When evaluating health risks, each of the following are causes of loss except:

Inflation ...are include genetics, accidental injuries and poor care

Sue is a very bright college student who stays up to date on all the news channels. In response to the number of child abductions she has seen on the news lately, she insists that her mother purchase a child harness for her younger brother. What type of bias is this?

Media

________ grouped strategy into three different time frames (short term, medium term, & long term).

Molson Coors

Which of the following actions describes a way organizations use expected value?

Organizations estimate the future cash flows that are generated by an investment and then discount them back to present value.

Political incentives often do what to the discount rate?

Political incentives often increase the discount rate.

A bias can be described by which of the following?

Subjective view

The following statement describes which of the following theories? "_________ is a theory of management that analyzes and synthesizes workflows. Its main objective is improving economic efficiency, especially labor productivity."

Taylorism

Which of the following is a primary benefit of using the linear optimization model?

The model reveals supply chain dependencies and bottlenecks.

According to Joshua Gowin's article on "smart" pills, which of the following is not a characteristic of students who used Ritalin and Adderall as study drugs?

These students did steady work throughout the semester. -are include... these students tended to have lower GPAs, in the 2.0-3.0 range, These students smoked more pot than average students, These students skipped more classes than average students.

Age biases occur when people in different age groups interpret information about risk differently.

True

In "Strategy, Risk, and the Global Financial Crisis", Walter Keichel argues that a fair-minded observer would conclude which of the following statements in regards to the financial crisis?

While strategy and its champions may not have been a main cause in bringing on the global financial crisis, they did not do much to avert it.

Joshua Gowin posits that since most people believe Adderall and Ritalin will work, they will at minimum offer

a placebo effect.

Poor financial planning by individuals may cause:

a return to the workforce following retirement

Which of the following is the definition of supply chain:

a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer

The set of optimal conditions for the continuous emergence of other strategies is:

adaptive strategies

Which of the following was NOT included in the 10 recommendations from the Baker Report?

additional expertise within workforce

A(n) _______ is an inclination of temperaments or outlook to present or hold a partial persepctive at the expense of (possibly equally valid) alternatives in reference to objects, people, or groups.

bias

Which of the following terms best describes a rare, unexpected event (e.g., the discovery of alien life on Mars)?

black swan

Historical data analysis works well in identifying risks to supply chain (supply chain risk) in all of the following except:

black swans

In defense of "smart" pills, Joshua Gowin frequently compares them to what other cognitive enhancer?

caffeine

Chipotle's supply chain problems highlighted the real trade-offs between:

centralized processing (quality control) vs. local fresh never frozen ingredients

cost of capital is

commensurate with riskness of firm

Proper decision making implies entities willing to accept additional risk should be:

compensated

According to Alan Schwarz, which involved party should first change how ADHD medicine is given?

doctors

natural incentives

due things out of "curiosity, fear, anger, pain, joy"

experience bias

ex those who lived through a diaster overestimated the likelihood that it will happen again compared to those who have not

People who have experienced a low-probability/high-consequences event tend to overestimate its likelihood. What type of bias does this describe?

experience bias

Real property owned by individuals exposed to risk of loss include all of the following EXCEPT:

family car ...are include crops, home(primary residence) and barn

Which of the following is an example of a hazard risk?

flood

Critics of BP's approach to rebrand asked how an oil company could be which of the following?

green

Which of the following was not included in the corporate strategy perspective for BP?

growth through hostile takeovers

Which category of risk is often managed by purchasing insurance?

hazard risk

Which of the following is not a benefit of taking Ritalin and Adderall listed by Joshua Gowin?

heightened awareness in healthy, well-rested adults ..actual benefits are longer-lasting cognitive enhancement, no jitteriness, quicker consumption

According to Alan Schwarz in "Is the Use of 'Smart' Pills for Cognitive Enhancement Dangerous?", false prescriptions of ADHD medicine is on the rise. Which of the following is not listed as being one of the dangers of false prescription?

increased mental awareness ...are include strong addiction, suicidal thoughts and loss of weight