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Exam 3: Managing Legal Risks

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Question 1

Multiple Choice

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A business finds that employees are involved in many road accidents that result in damages to its fleet of motor vehicles,despite having driving training and instruction.Rather than fully insuring its equipment,the business elects to insure its vehicles subject to a deductible of $1,500 per vehicle.Which approach to risk management does this plan reflect?

A) risk avoidance
B) risk reduction
C) risk transference
D) risk retention

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Question 2

Multiple Choice

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Which of the following is an example of risk avoidance?

A) discontinuing products and product lines
B) self-insurance
C) insurance policy deductibles
D) hiring in-house legal counsel

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Question 3

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Prevention of loss is the primary goal of a risk management plan.

What initial step would you suggest that a business should go through in selecting a lawyer?

What is enterprise risk assessment,and how is it related to a legal risk management plan?

Which of the following would strongly support a business strategy for managing risks uniquely associated with commitments made by employees to suppliers or customers?

A private investment firm that deals exclusively in derivative investment products is concerned its market activities may become regulated.What measures should the institution take to begin to address its concerns?

Identification of loss is the primary goal of a risk management plan.

Requiring employees to wear protective equipment is an example of a risk avoidance strategy.

In which risk management process would consumer protection regulations regarding advertising be noted?

Benta recently purchased an office cleaning business with established long-term contracts to provide cleaning services to a number of large office building operators.Which of the following actions would immediately allow Benta to be aware of the potential legal risks with the building operators?

Identify and briefly describe the legal risks associated with the human resources function of a business organization.Discuss the implications of not having a risk management plan in place with regard to its human resources.

Identification of potential exposure to legal risks involves assessing the organization's functional areas and reviewing its business decisions and business relationships.

Which of the following correctly identifies elements that would be contained in a legal risk management plan?

Evaluating risks involves assessing both the probability and severity of loss.

Risk managers should have ample knowledge of the business,its activities,and the industry it operates in.

Against which of the following possibilities should a high probability that a particular loss-causing event will occur be weighed during the risk evaluation process?

In 2014,General Motors (GM) began recalling vehicles because of concerns about possible faulty ignition switches in some of its vehicles.What type of risk management strategies was GM attempting to employ when it initiated the recall?

Duble Mining Ltd.began gold mining operations in Brazil a year ago.Recent changes in government policy cause the risk management department to transfer some uninsured risk to satisfy their commercial lenders.Which of the following actions by Duble Mining would immediately confirm to the commercial lenders that their requirements have been met?

After several interviews and calls to follow up on references,Fashion By Design Inc.chooses a seasoned lawyer from a well-known commercial law firm to provide legal services to the company.Why does the company's management expend substantial effort during the lawyer selection?