Actuarial Notes

Exam DISC-RM Practice Question 28

Study guide: Exam DISC-RM

A retailer rates its risks on scales of 1 to 5 and multiplies likelihood by impact. Shoplifting has likelihood 5 and impact 1. A flood at its only distribution center has likelihood 1 and impact 5. Both score 5. What does plotting them on a risk map show that the score hides?

  • A) That both risks call for the same treatment, because their scores are equal
  • B) That the flood costs five times as much as shoplifting in an average year
  • C) That neither risk needs attention, because both score below the scale's midpoint
  • D) That shoplifting suits retention with loss control, while the flood suits transfer

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