Question：Which of the following are potential benefits of risk management for a company?
A. Lower insurance costs
B. Elimination of residual risk
C. Cash flow predictability
D. Limitation of possibility of bankruptcy
E. Increased confidence of shareholders
The correct answers are:Cash flow predictability; Limitation of possibility of bankruptcy; Increased confidence of shareholders; Lower insurance costs.
解析：Risk management should reduce the risks that can result in unexpected cash flows or ultimately bankruptcy. As a result shareholders should be happier with the company.
Lower insurance costs could possibly be a benefit in accordance with the terms of the question, if insurance companies reduce premiums because they are happy with the risk management steps that the company is taking. However if the company chooses to manage its risks by significant use of insurance, premiums may also increase.
Residual risk is the risk that remains with the company after normal steps have been taken to manage other risks. It is unlikely to be eliminated as companies generally do not operate in a risk free environment.
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