ARM 400 PRACTICE EXAM QUESTIONS AND
ANSWERS
Which of the following risk management program goals is an essential goal for all public
entities? - Answers - Continuity of operations
The fundamental purpose of a risk management framework is to - Answers - Integrate
risk management throughout the organization.
Which one of the following is a tool that can be used by fraud investigators to compare
documents and analyze notes? - Answers - Text mining
Samuel was recently hired as a risk management professional for Parker Property
Management. He has been asked by senior management to review the organization's
current insurance policies to make sure that the organization is adequately protected,
and also see if there are any opportunities to save on the premiums. Samuel must do
which one of the following through internal communication before he will be able to
complete this task? - Answers - Determine the organization's risk appetite
One enterprise risk management (ERM) approach to categorizing risks involves dividing
risks into four risk quadrants. The risks categorized as hazard risks are - Answers -
Traditionally managed by risk management professionals.
Which one of the following provides a measure of the maximum potential damage
associated with an occurrence? - Answers - Exposure
When communicating a decision up the organization's chain of command, consulting
with outside experts can help a risk management professional do which one of the
following? - Answers - Enhance stakeholders' confidence in the process
The fundamental purpose of a risk management framework is to - Answers - Integrate
risk management throughout the organization.
Risk can be classified as diversifiable or nondiversifiable. Which one of the following
statements is true with respect to this type of risk classification? - Answers -
Diversifiable risks tend not to be correlated so they can be managed through
diversification or spread of risk.
According to the law of large numbers, as the number of exposure units insured
increases, - Answers - The relative accuracy of predictions about future losses
increases.
ANSWERS
Which of the following risk management program goals is an essential goal for all public
entities? - Answers - Continuity of operations
The fundamental purpose of a risk management framework is to - Answers - Integrate
risk management throughout the organization.
Which one of the following is a tool that can be used by fraud investigators to compare
documents and analyze notes? - Answers - Text mining
Samuel was recently hired as a risk management professional for Parker Property
Management. He has been asked by senior management to review the organization's
current insurance policies to make sure that the organization is adequately protected,
and also see if there are any opportunities to save on the premiums. Samuel must do
which one of the following through internal communication before he will be able to
complete this task? - Answers - Determine the organization's risk appetite
One enterprise risk management (ERM) approach to categorizing risks involves dividing
risks into four risk quadrants. The risks categorized as hazard risks are - Answers -
Traditionally managed by risk management professionals.
Which one of the following provides a measure of the maximum potential damage
associated with an occurrence? - Answers - Exposure
When communicating a decision up the organization's chain of command, consulting
with outside experts can help a risk management professional do which one of the
following? - Answers - Enhance stakeholders' confidence in the process
The fundamental purpose of a risk management framework is to - Answers - Integrate
risk management throughout the organization.
Risk can be classified as diversifiable or nondiversifiable. Which one of the following
statements is true with respect to this type of risk classification? - Answers -
Diversifiable risks tend not to be correlated so they can be managed through
diversification or spread of risk.
According to the law of large numbers, as the number of exposure units insured
increases, - Answers - The relative accuracy of predictions about future losses
increases.
