1. Describe how the scope of risks encompassed in enterprise risk management differs from those of traditional corporate risk management.
2. Explain why interest in risk management has increased dramatically in the United States in recent years.
3. How did the corporate scandal at Enron prompt the accounting profession to take a leading role in the call for improvements in corporate risk management?
4. Describe the difference between pure and specula- tive risks. Provide an example of each.
5. Describe the process of risk diversification, noting the two conditions that must exist for diversification to be effective.
6. Explain why auto and life insurance are two types of risk that are well suited to diversification by insurers through the use of risk pooling.
7. Explain why damage from floods and wars are two types of risk that are not well suited to diversifica- tion by insurers through the use of risk pooling.
