CHAPTER 3

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1. When selecting a lawyer or law firm, a business should

consult with clients of the firm
meet with members of the firm
discuss fee structure with the firm
all of the above
none of the above

2. Doing regular credit checks on customers is an example of

risk avoidance
risk reduction
risk retention
risk transference
risk aversion

3. Risk transference can entail

insurance
indemnity
exemptions
waivers of liability
all of the above

4. Managing the legal risks regarding personnel requires

ensuring that suppliers are paid
ensuring that customers pay
setting performance standards
using standard form contracts
none of the above

5. A business that has an in-house legal department should

ensure that the legal department is separated from the company's business
ensure that the legal department is integrated with the company's business
hire only lawyers with many years' experience in other companies
hire only lawyers with no prior experience in other companies
close the department and rely on the services of law firms

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6. When General Motors assessed the cost of moving the location of the 1979 Malibu gas tank to make it safer and decided to keep it in the same location, GM was

avoiding the risk
reducing the risk
retaining the risk
transferring the risk
ignoring the risk

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7. Seeking other sources of financing rather than providing personal guarantees is a form of ________ for the owners of a business.

risk avoidance
risk reduction
risk retention
risk elimination
risk aversion

8. The goal of a risk management plan is to

A) be aware of the risks
B) make conscientious decisions about dealing with risks
C) find ways to reduce insurance premiums
D) a & b
E) c & d

9. A risk management manual should include

a schedule for inspecting facilities
a system for ensuring inspections take place
an accident reporting system
information on insurance coverage
all of the above

10. When creating a risk management plan, it is important to

analyse business activities
know when to seek outside assistance
develop risk-minimizing practices
all of the above
none of the above