ARM 401 EXAM PRACTICE QUESTIONS
WITH 100% CORRECT ANSWERS {
GRADED A+}
A risk map showing a large difference between inherent and residual
risk indicates which one of the following?
A. The risk is within the organization's risk appetite
B. The current risk treatment is ineffective
C. The current risk treatment is effective
D. The risk does not need to be treated - ✔✔C
Lucas, a risk professional for Jones Incorporated, recently met with
experts from the utility industry to discuss the potential loss of supply
and risks to the infrastructure. Lucas must now decide which risks, and
,proposed treatments, need to be communicated to the board of Jones
Incorporated. Lucas should make this decision based on
A. The supply source involved.
B. The organization's risk appetite and tolerance levels.
C. Whether the risk in natural or man-made.
D. Whether any government regulations are involved or not. - ✔✔B
SoCal Movie Company produces movies at a studio in Southern
California. The risk manager decided to identify the range of potential
consequences associated with various risks that the company faces. For
example, if a severe earthquake occurred while the company was filming
a movie, there could be deaths and injuries, destruction of movie sets,
delays in production, costs associated with filming at an alternative
location, and loss of reputation and good will. The type of analysis
performed by the risk manager is called
A. SWOT analysis.
B. Scenario analysis.
,C. Sensitivity analysis.
D. HAZOP analysis. - ✔✔B
Insurance Company (IC) sells its coverages through independent
insurance agents. Independent agents represent several insurance
companies. Tom, the president of IC, has learned that the independent
agent who is the highest producer for IC is considering selling his
agency. IC is considering acquiring the agency since Tom is concerned
that if the agency is sold, IC may lose a substantial amount of business.
Tom asked IC's risk manager to analyze the prospective purchase. The
analysis revealed that the acquisition would likely secure most of IC's
book of business with the agency but also revealed local competitors that
would try to place the business as well. In addition, the analysis revealed
the opportunity for IC to move some accounts currently placed with
other insurers over to IC. Also, it was learned that a competitor
expressed an interest in the agency acquisition. The analysis performed
by the risk manager is a - ✔✔D
, Murray Trucking is interested in evaluating which risk factors are most
likely to lead to the most costly accidents. They are evaluating risk
factors such as speed, weather conditions, driver experience, distance
traveled, and gross vehicle weight. Which one of the following statistical
measurements would be useful for the risk manager when calculating the
probability of the different risk factors causing severe accidents?
A. Telematics
B. Inverse covariance
C. Variance
D. Monte Carlo simulation - ✔✔C
Blithe Manufacturing has experienced a drop in market share. The
marketing department has come up with a way to differentiate their
product in order to regain market share. Blithe has assembled a team of
individuals representing different organizational functions to analyze
both internal and external factors of the new product and decide whether
WITH 100% CORRECT ANSWERS {
GRADED A+}
A risk map showing a large difference between inherent and residual
risk indicates which one of the following?
A. The risk is within the organization's risk appetite
B. The current risk treatment is ineffective
C. The current risk treatment is effective
D. The risk does not need to be treated - ✔✔C
Lucas, a risk professional for Jones Incorporated, recently met with
experts from the utility industry to discuss the potential loss of supply
and risks to the infrastructure. Lucas must now decide which risks, and
,proposed treatments, need to be communicated to the board of Jones
Incorporated. Lucas should make this decision based on
A. The supply source involved.
B. The organization's risk appetite and tolerance levels.
C. Whether the risk in natural or man-made.
D. Whether any government regulations are involved or not. - ✔✔B
SoCal Movie Company produces movies at a studio in Southern
California. The risk manager decided to identify the range of potential
consequences associated with various risks that the company faces. For
example, if a severe earthquake occurred while the company was filming
a movie, there could be deaths and injuries, destruction of movie sets,
delays in production, costs associated with filming at an alternative
location, and loss of reputation and good will. The type of analysis
performed by the risk manager is called
A. SWOT analysis.
B. Scenario analysis.
,C. Sensitivity analysis.
D. HAZOP analysis. - ✔✔B
Insurance Company (IC) sells its coverages through independent
insurance agents. Independent agents represent several insurance
companies. Tom, the president of IC, has learned that the independent
agent who is the highest producer for IC is considering selling his
agency. IC is considering acquiring the agency since Tom is concerned
that if the agency is sold, IC may lose a substantial amount of business.
Tom asked IC's risk manager to analyze the prospective purchase. The
analysis revealed that the acquisition would likely secure most of IC's
book of business with the agency but also revealed local competitors that
would try to place the business as well. In addition, the analysis revealed
the opportunity for IC to move some accounts currently placed with
other insurers over to IC. Also, it was learned that a competitor
expressed an interest in the agency acquisition. The analysis performed
by the risk manager is a - ✔✔D
, Murray Trucking is interested in evaluating which risk factors are most
likely to lead to the most costly accidents. They are evaluating risk
factors such as speed, weather conditions, driver experience, distance
traveled, and gross vehicle weight. Which one of the following statistical
measurements would be useful for the risk manager when calculating the
probability of the different risk factors causing severe accidents?
A. Telematics
B. Inverse covariance
C. Variance
D. Monte Carlo simulation - ✔✔C
Blithe Manufacturing has experienced a drop in market share. The
marketing department has come up with a way to differentiate their
product in order to regain market share. Blithe has assembled a team of
individuals representing different organizational functions to analyze
both internal and external factors of the new product and decide whether
