Exam DISC-RM Practice Question 34
Study guide: Exam DISC-RM
Each of an insurer's business units stays inside its own risk limit, set as if the units' results were independent. Yet the enterprise's total risk exceeds what its capital can support. What most likely explains this?
- A) The units' risks are positively correlated, so they diversify less than assumed
- B) The units' risks are negatively correlated, so they offset one another
- C) Each unit holds more capital than its own standalone need
- D) The units report their risks quarterly rather than monthly
Answer this question and see the worked solution