TM - Chapter 16 Quiz

"Due to a loss of proprietary information held for clients, ABC Company has been named in a billion dollar lawsuit. It was determined that the loss of information was due to a breach in its computer system firewalls by outside parties. When the lawsuit became public, the company experienced a steep drop in its stock price. This scenario is an example of what kind of risk? "

external theft/fraud

"Banks often control information flow, records and assets, therefore it is critical that banks have: "

Backup systems and disaster recovery procedures

"XYZ Company has incurred a financially devastating event because of a typhoon at its offshore manufacturing plant where the majority of its products are developed. Due to the impact on liquidity, the company may not be able to survive. What should the Treasurer have done in order to mitigate the risk associated with this type of event? "

Developed a contingency funding plan

"Two months after a government overthrow, the new Minister of Industry and Culture took over the country s largest steel company and compensated the owners at 50% of book value. What is the government s action called? "

Expropriation

" After a recent review of its insurance policies, a petroleum products company determines it needs to re-evaluate its risk exposure to potentially reduce its insurance premiums. The company has operated in two locations for 20 years but only produces and stores petroleum at one location. In doing so, the risk manager determines the following exposures: The number of employee workers compensation claims due to injuries while loading trucks has increased 25% in the past 12 months The primary tank used for petroleum storage is 13 years old and standard life of tanks of this model is 20 years There is only one road into the current petroleum storage facility Given the above information, if the risk manager constructs a second road into the petroleum storage facility, what risk management strategy is being used?"

risk mitigation