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Last Updated: Aug 05, 2026
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| Section | Objectives |
|---|---|
| Ethics and Professional Standards | - Professional conduct and ethical responsibilities - Industry codes of ethics and decision-making standards |
| Governance, Standards and Regulatory Frameworks | - Risk governance principles in financial institutions - Regulatory expectations and compliance structures |
| Case Study Application | - Integrated risk assessment scenarios - Governance and ethics decision analysis |
| Best Practices in Risk Management | - Enterprise risk management frameworks - Operational and financial risk controls |
1. The Fortress Re finite reinsurance model
A) allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, but as the risks were spread out over time the future premiums were not accounted for as current liabilities on the books of the pool members, thus giving a false impression of profitability
B) allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid annual premiums to cover these policies, and as the risks were spread out over the year the annual premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability
C) allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, and as the risks were spread out over time the future premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability
D) allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, and as the risks were spread out over time the annual premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability
2. When Fannie Mae and Freddie Mac were taken under US government conservatorship, which of the following was not included within their operating mandate?
A) Fannie Mae and Freddie Mac will continue to buy home loans from banks to repackage them as mortgage-backed securities
B) The US government will buy mortgage-backed securities in the open market as needed
C) There was a 2 year limit to the conservatorship
D) The US government will provide capital as needed in return for preferred shares in the companies
3. Taisei Fire and Marine Insurance Co
A) had a full understanding from other members of the pool of the pool's liabilities
B) relied almost entirely on Fortress Re's management team for information on the risks in its portfolio
C) relied on the information it received from other members of the reinsurance pool to manage its risks
D) had a full understanding from Fortress Re of the risks in the pool
4. According to the PwC report China Aviation Oil, in order to avoid recording and reporting losses, the company adopted which approach covering up its losses?
A) selling short-term options with extremely high-risk profiles to generate premiums to cover the cost of closing out loss-making option positions
B) selling long-term options with extremely high-risk profiles to generate premiums to cover the cost of closing out loss-making option positions
C) selling short-term options with extremely low-risk profiles to generate premiums to cover the cost of closing out loss-making option positions
D) selling long-term options with extremely low-risk profiles to generate premiums to cover the cost of closing out loss-making option positions
5. Which of the following is NOT part of the PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct) Guidance on Ethical Behavior?
A) Take responsibility for your work
B) Respect local laws and regulations
C) Ensure globally accepted standards are adhered to at all costs
D) Respect local customs
Solutions:
| Question # 1 Answer: A | Question # 2 Answer: C | Question # 3 Answer: B | Question # 4 Answer: B | Question # 5 Answer: C |
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