Associate in Risk Management (ARM™)
Questions And Correct Answers (Verified
Answers) Plus Rationales 2026 Q&A | Instant
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1. Risk management primarily seeks to:
A. Eliminate all uncertainty
B. Increase speculation
C. Control uncertainty affecting objectives
D. Avoid business operations
Answer: C
Rationale: Risk management focuses on identifying, analyzing, and
controlling uncertainty that may impact organizational objectives rather
than eliminating all uncertainty.
2. Pure risk differs from speculative risk because pure risk:
A. Always produces profit
B. Only involves the chance of loss or no loss
, C. Guarantees loss
D. Includes investment risk
Answer: B
Rationale: Pure risk allows only loss or no loss outcomes, such as
accidents or natural disasters.
3. Which is an example of speculative risk?
A. Fire damage
B. Liability lawsuit
C. Stock investment
D. Workplace injury
Answer: C
Rationale: Speculative risk includes the possibility of gain or loss, such as
investing in securities.
4. Enterprise Risk Management (ERM) integrates risk management
with:
A. Maintenance scheduling
B. Strategic planning
, C. Payroll processing
D. Inventory counting
Answer: B
Rationale: ERM aligns risk considerations with strategic objectives and
decision-making.
5. The first step in the risk management process is:
A. Risk control
B. Risk identification
C. Risk financing
D. Risk monitoring
Answer: B
Rationale: Risks must first be identified before analysis or treatment
decisions can occur.
6. Frequency refers to:
A. Severity of loss
B. Probability of occurrence
C. Cost per claim
D. Legal liability
, Answer: B
Rationale: Frequency measures how often losses occur.
7. Severity measures:
A. Loss magnitude
B. Risk tolerance
C. Probability of events
D. Exposure units
Answer: A
Rationale: Severity evaluates how costly or damaging a loss is when it
occurs.
8. Which risk control technique reduces loss frequency?
A. Insurance purchase
B. Safety training
C. Deductibles
D. Risk transfer
Answer: B
Rationale: Safety training reduces the likelihood of incidents occurring.
Questions And Correct Answers (Verified
Answers) Plus Rationales 2026 Q&A | Instant
Download Pdf
1. Risk management primarily seeks to:
A. Eliminate all uncertainty
B. Increase speculation
C. Control uncertainty affecting objectives
D. Avoid business operations
Answer: C
Rationale: Risk management focuses on identifying, analyzing, and
controlling uncertainty that may impact organizational objectives rather
than eliminating all uncertainty.
2. Pure risk differs from speculative risk because pure risk:
A. Always produces profit
B. Only involves the chance of loss or no loss
, C. Guarantees loss
D. Includes investment risk
Answer: B
Rationale: Pure risk allows only loss or no loss outcomes, such as
accidents or natural disasters.
3. Which is an example of speculative risk?
A. Fire damage
B. Liability lawsuit
C. Stock investment
D. Workplace injury
Answer: C
Rationale: Speculative risk includes the possibility of gain or loss, such as
investing in securities.
4. Enterprise Risk Management (ERM) integrates risk management
with:
A. Maintenance scheduling
B. Strategic planning
, C. Payroll processing
D. Inventory counting
Answer: B
Rationale: ERM aligns risk considerations with strategic objectives and
decision-making.
5. The first step in the risk management process is:
A. Risk control
B. Risk identification
C. Risk financing
D. Risk monitoring
Answer: B
Rationale: Risks must first be identified before analysis or treatment
decisions can occur.
6. Frequency refers to:
A. Severity of loss
B. Probability of occurrence
C. Cost per claim
D. Legal liability
, Answer: B
Rationale: Frequency measures how often losses occur.
7. Severity measures:
A. Loss magnitude
B. Risk tolerance
C. Probability of events
D. Exposure units
Answer: A
Rationale: Severity evaluates how costly or damaging a loss is when it
occurs.
8. Which risk control technique reduces loss frequency?
A. Insurance purchase
B. Safety training
C. Deductibles
D. Risk transfer
Answer: B
Rationale: Safety training reduces the likelihood of incidents occurring.
