Risk Management Chapter 1

What is risk management?

• Avoiding all risks in a business

• Assessing and mitigating risks to control or reduce their impact
  

• Ensuring maximum profit in all decisions

• Ignoring uncertainties to focus on opportunities

Which of the following is NOT a step in the risk management process?

• Identification

• Marketing of risks

• Development of a plan

• Review and monitoring

Which Quranic verse provides a precedent for risk management?

• Surah Yusuf, Ayat 47-49

• Surah Al-Baqarah, Ayat 275

• Surah Al-Maidah, Ayat 93

• Surah An-Nisa, Ayat 161

What does the principle "Al-Ghunm bil-Ghurm" mean?

• Speculation is permissible

• Profit is guaranteed without liability

• Risk avoidance is mandatory

• No profit without risk

What does "Al-Kharaj bil Dhaman" signify?

• Sharing profits among all stakeholders

• Liability follows the entitlement to returns
  
  

• Reducing risks through speculation

• Avoiding risks to maximize rewards
  
  

What type of risk affects the entire economy?

• Particular risk

• Pure risk

• Speculative risk

• Fundamental risk

Which method emphasizes dealing with individual risks separately?

• Risk aggregation

• Risk decomposition

• Risk transfer

• Risk evaluation

What is a key difference between Islamic and conventional risk management?

• Islamic principles prohibit the management of risk
  
  

• Islamic risk management focuses solely on speculative risks

• Conventional methods avoid profit sharing

• Islamic risk management incorporates ethical and Shariah principles

What is the first step in the risk management process?

• Evaluation

• Identification

• Implementation

• Review

What is the term for financial damage immediately caused by a peril?

• Indirect loss

• Direct loss

• Hazard

• Speculative loss