ARM 400 QUESTIONS AND ANSWERS
The fundamental purpose of a risk management framework is to - Answers - Integrate
risk management throughout the organization
Company G is a manufacturer of high profile golf equipment. The risk management
professional for Company G is concerned about loss of business related to product
design. Failing to respond to changing customer demand and preferences in the design
of golf clubs could cost Company G significant market share. Categorized according to
the quadrants of risk, this exposure to loss is classified as - Answers - Strategic Risk
Aligning risks with the organization's risk appetite defines - Answers - Tolerable
uncertainty
An organization must meet the standard of care that it owes to others in order to ensure
that - Answers - Legal obligations are satisfied
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
Which one of the following statements is true with regard to preventive analytics? -
Answers - Preventive analytics uses smart products and data analytics to identify root
loss causes and their implications.
Autonomous Vehicle Applications (AVA) is a start-up company that develops safety
technologies that can be sold to companies that are producing autonomous vehicles.
One technology AVA is developing allows an autonomous vehicle to detect, extract, and
analyze images; and then to respond to the images. For example, the technology would
detect a presence in a crosswalk, extract the image, and a computer would analyze the
image. When the image was determined to be a human being, the vehicle would slow
down or stop until the crosswalk was clear. This technology, which is designed to
capture and analyze images, and to act on the recognition of the image; is called -
Answers - Computer Vision
The emerging technologies applied to risk assessment and control link the physical
domain to the virtual domain. Together, these domains linked by the emerging
technologies create a - Answers - Connected ecosystem.
It's not cost effective to use human assets to inspect tracks, bridges, and trestles.
Instead, SIR has started to use drones. A drone can fly low over tracks and
above/below bridges and trestles. The drones record video that is transmitted to
corporate headquarters where it is simultaneously scanned for derailment hazards. In
, the past six months, the drones detected a track blockage caused by a rock slide and
damage to tracks in a remote area cause by an earthquake. SIR dispatched work crews
to make the tracks once again passable, and no derailments occurred. SIR's use of
drones, video, real-term video scanning, and computer analysis illustrates which one of
the following? - Answers - Preventative analytics
A municipal water plant installed water flow sensors and water pressure sensors on the
water pipes leaving the plant. The sensors make sure water is flowing properly and that
there are no leaks or clogs which could produce a loss. These types of sensors are -
Answers - Mechanical Sensors
Mutual Fund Company (MFC) offers a wide array of mutual fund options to investors.
Each mutual fund has a different fund objective and set of investment guidelines that
apply to the fund. While MFC gives considerable freedom to its fund portfolio managers,
they are required to abide by the fund's investment guidelines. To monitor compliance,
MFC developed a computer algorithm. The computer algorithm continuously monitors
each fund's compliance with investment guidelines. If a fund manager violates the
investment guidelines, the computer immediately notifies MFC's internal control director,
and corrective action is taken. MFC's use of the computer algorithm to monitor
investment compliance and to provide notification when corrective action is necessary
illustrates use of - Answers - Artificial intelligence.
After opening its third store, Shoehorn Shoes decided to purchase new inventory
tracking software for all of its stores. Which one of the following external or internal
environments does this decision relate to? - Answers - Operations environment
The main advantage of a formal internal communication system is that - Answers -
Individuals know to whom to report.
Which one of the following statements is correct regarding risk owners? - Answers -
Generally, the stakeholder who is most affected by or creates a risk should be its risk
owner.
Which one of the following statements is correct regarding an organization's code of
ethics? - Answers - The code of ethics should include principles and concepts that are
dynamic enough to remain relevant in a rapidly changing business environment.
Which one of the following is an example of an internal key risk indicator (KRI) that a
contractor might monitor? - Answers - Budget variances
The business process management (BPM) life cycle incorporates five steps. Which one
of the following best describes the first step in the BPM process? - Answers - Processes
are designed or redesigned by considering workflows and affected personnel.
Which of the following statements best describes the risk governance role and
responsibility of a corporate board of directors? - Answers - To set the organization's
The fundamental purpose of a risk management framework is to - Answers - Integrate
risk management throughout the organization
Company G is a manufacturer of high profile golf equipment. The risk management
professional for Company G is concerned about loss of business related to product
design. Failing to respond to changing customer demand and preferences in the design
of golf clubs could cost Company G significant market share. Categorized according to
the quadrants of risk, this exposure to loss is classified as - Answers - Strategic Risk
Aligning risks with the organization's risk appetite defines - Answers - Tolerable
uncertainty
An organization must meet the standard of care that it owes to others in order to ensure
that - Answers - Legal obligations are satisfied
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
Which one of the following statements is true with regard to preventive analytics? -
Answers - Preventive analytics uses smart products and data analytics to identify root
loss causes and their implications.
Autonomous Vehicle Applications (AVA) is a start-up company that develops safety
technologies that can be sold to companies that are producing autonomous vehicles.
One technology AVA is developing allows an autonomous vehicle to detect, extract, and
analyze images; and then to respond to the images. For example, the technology would
detect a presence in a crosswalk, extract the image, and a computer would analyze the
image. When the image was determined to be a human being, the vehicle would slow
down or stop until the crosswalk was clear. This technology, which is designed to
capture and analyze images, and to act on the recognition of the image; is called -
Answers - Computer Vision
The emerging technologies applied to risk assessment and control link the physical
domain to the virtual domain. Together, these domains linked by the emerging
technologies create a - Answers - Connected ecosystem.
It's not cost effective to use human assets to inspect tracks, bridges, and trestles.
Instead, SIR has started to use drones. A drone can fly low over tracks and
above/below bridges and trestles. The drones record video that is transmitted to
corporate headquarters where it is simultaneously scanned for derailment hazards. In
, the past six months, the drones detected a track blockage caused by a rock slide and
damage to tracks in a remote area cause by an earthquake. SIR dispatched work crews
to make the tracks once again passable, and no derailments occurred. SIR's use of
drones, video, real-term video scanning, and computer analysis illustrates which one of
the following? - Answers - Preventative analytics
A municipal water plant installed water flow sensors and water pressure sensors on the
water pipes leaving the plant. The sensors make sure water is flowing properly and that
there are no leaks or clogs which could produce a loss. These types of sensors are -
Answers - Mechanical Sensors
Mutual Fund Company (MFC) offers a wide array of mutual fund options to investors.
Each mutual fund has a different fund objective and set of investment guidelines that
apply to the fund. While MFC gives considerable freedom to its fund portfolio managers,
they are required to abide by the fund's investment guidelines. To monitor compliance,
MFC developed a computer algorithm. The computer algorithm continuously monitors
each fund's compliance with investment guidelines. If a fund manager violates the
investment guidelines, the computer immediately notifies MFC's internal control director,
and corrective action is taken. MFC's use of the computer algorithm to monitor
investment compliance and to provide notification when corrective action is necessary
illustrates use of - Answers - Artificial intelligence.
After opening its third store, Shoehorn Shoes decided to purchase new inventory
tracking software for all of its stores. Which one of the following external or internal
environments does this decision relate to? - Answers - Operations environment
The main advantage of a formal internal communication system is that - Answers -
Individuals know to whom to report.
Which one of the following statements is correct regarding risk owners? - Answers -
Generally, the stakeholder who is most affected by or creates a risk should be its risk
owner.
Which one of the following statements is correct regarding an organization's code of
ethics? - Answers - The code of ethics should include principles and concepts that are
dynamic enough to remain relevant in a rapidly changing business environment.
Which one of the following is an example of an internal key risk indicator (KRI) that a
contractor might monitor? - Answers - Budget variances
The business process management (BPM) life cycle incorporates five steps. Which one
of the following best describes the first step in the BPM process? - Answers - Processes
are designed or redesigned by considering workflows and affected personnel.
Which of the following statements best describes the risk governance role and
responsibility of a corporate board of directors? - Answers - To set the organization's
