1. All of the following are disadvantages of using insurance in a corporate risk management program EXCEPT:
Option 1: Premium payments are not tax deductible.
Option 2: Insurance coverage may be expensive.
Option 3: It may be time consuming to negotiate the coverages and terms.
Option 4: The presence of insurance may lead to reduced incentives to engage in loss control.
2. X Industries is a technology company that prides itself on the ability to react quickly to new product developments. It maintains a significant research and development budget. Regarding risk-reducing activities,X Industries is:
Option 1: More likely to retain risks thereby retaining use of more funds.
Option 2: More likely to retain risk because of their ability to react to changing developments.
Option 3: Less likely to retain risks to concentrate on what they do best.
Option 4: Less likely to retain risk to help ensure they have a steady supply of investment funds.