ARM 401 Exam 2024 Questions & Answers |
100% Correct | Verified
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 or not it is feasible. Which one of the following team
approaches to risk identification is Blithe using?
A. Delphi technique
B. HAZOP workshop
C. SWOT analysis
D. Scenario analysis - ✔✔C
William is a project manager for Parker International. He has been assigned a key project with a short
deadline. William realizes that this project is going to require revising the job duties of some individuals
and a collaborative effort from of all team members. When revising job duties, William should do which
one of the following?
A. Overload some individuals with more work than others
B. Try to enrich individuals' work rather than merely expand it
,C. Rely on the most senior individuals to take on additional duties
D. Focus on the individuals' personality rather than results - ✔✔B
Shelton Manufacturing executives are growing increasingly concerned about wildfires and the potential
effects on supply chain management. As the risk professional, Carla has been asked to meet with experts
on the subject and report back to the executive team. Which one of the following should Carla do before
meeting with external wildfire experts?
A. Carla should speak with internal subject-matter experts in hopes that she can avoid needing the
external wildfire experts.
B. Carla should research the field and get a working understanding of wildfires.
C. Carla should solicit questions from internal experts and submit them to the external wildfire experts.
D. Carla should try to learn as much as possible about wildfires, so she can impress the wildfire experts. -
✔✔B
An organization practicing holistic risk management would assess the cost of raw materials and foreign
exchange risk under which one of the following quadrants of risk?
A. Strategic risk
B. Financial risk
C. Operational risk
D. Hazard risk - ✔✔B
Risk maps differ from other risk assessment tools and techniques in which one of the following ways?
A. Risk maps dissect processes within the organization from input to output for the purpose of improving
them.
B. Risk maps identify, prioritize, and quantify risks in a two-dimensional pictorial that illustrates
frequency and severity on vertical and horizontal axes.
C. Risk maps have the potential to identify both negative risks and opportunity risks.
D. Risk maps are able to quickly explore a vast number of possible outcomes based on large datasets. -
✔✔B
As a best practice, a risk register should be an interactive computer system. Which one of the following
individuals should be responsible for continually updating risk information?
, A. Customer
B. Risk management professional
C. Risk owner
D. Chief executive officer - ✔✔C
A tool developed at the risk owner level that links specific activities, processes, projects, or plans to a list
of identified risks and results of risk analysis and evaluation; and that is ultimately consolidated at the
enterprise level is called a
A. Risk report.
B. Risk map.
C. Risk matrix.
D. Risk register. - ✔✔D
Which one of the following risk assessment tools has the potential to identify both negative risks and
opportunity risks?
A. Risk maps
B. Audits
C. Cause and effect analysis
D. Failure mode and effects analysis - ✔✔B
Emma is a risk management professional at a chemical engineering organization. A new process is being
designed and Emma has been told that all risks must be identified and eliminated during the design
stage. Emma is a risk management professional, but not a chemical engineering expert. She has
assembled a team of engineering experts and stakeholders to identify the risk associated with the
process by subdividing the process into components and reviewing each component and then
recommend solutions. Which one of the following team approaches to risk identification has Emma
chosen?
A. Delphi technique
B. SWOT analysis
C. Scenario analysis
D. HAZOP approach - ✔✔D
100% Correct | Verified
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 or not it is feasible. Which one of the following team
approaches to risk identification is Blithe using?
A. Delphi technique
B. HAZOP workshop
C. SWOT analysis
D. Scenario analysis - ✔✔C
William is a project manager for Parker International. He has been assigned a key project with a short
deadline. William realizes that this project is going to require revising the job duties of some individuals
and a collaborative effort from of all team members. When revising job duties, William should do which
one of the following?
A. Overload some individuals with more work than others
B. Try to enrich individuals' work rather than merely expand it
,C. Rely on the most senior individuals to take on additional duties
D. Focus on the individuals' personality rather than results - ✔✔B
Shelton Manufacturing executives are growing increasingly concerned about wildfires and the potential
effects on supply chain management. As the risk professional, Carla has been asked to meet with experts
on the subject and report back to the executive team. Which one of the following should Carla do before
meeting with external wildfire experts?
A. Carla should speak with internal subject-matter experts in hopes that she can avoid needing the
external wildfire experts.
B. Carla should research the field and get a working understanding of wildfires.
C. Carla should solicit questions from internal experts and submit them to the external wildfire experts.
D. Carla should try to learn as much as possible about wildfires, so she can impress the wildfire experts. -
✔✔B
An organization practicing holistic risk management would assess the cost of raw materials and foreign
exchange risk under which one of the following quadrants of risk?
A. Strategic risk
B. Financial risk
C. Operational risk
D. Hazard risk - ✔✔B
Risk maps differ from other risk assessment tools and techniques in which one of the following ways?
A. Risk maps dissect processes within the organization from input to output for the purpose of improving
them.
B. Risk maps identify, prioritize, and quantify risks in a two-dimensional pictorial that illustrates
frequency and severity on vertical and horizontal axes.
C. Risk maps have the potential to identify both negative risks and opportunity risks.
D. Risk maps are able to quickly explore a vast number of possible outcomes based on large datasets. -
✔✔B
As a best practice, a risk register should be an interactive computer system. Which one of the following
individuals should be responsible for continually updating risk information?
, A. Customer
B. Risk management professional
C. Risk owner
D. Chief executive officer - ✔✔C
A tool developed at the risk owner level that links specific activities, processes, projects, or plans to a list
of identified risks and results of risk analysis and evaluation; and that is ultimately consolidated at the
enterprise level is called a
A. Risk report.
B. Risk map.
C. Risk matrix.
D. Risk register. - ✔✔D
Which one of the following risk assessment tools has the potential to identify both negative risks and
opportunity risks?
A. Risk maps
B. Audits
C. Cause and effect analysis
D. Failure mode and effects analysis - ✔✔B
Emma is a risk management professional at a chemical engineering organization. A new process is being
designed and Emma has been told that all risks must be identified and eliminated during the design
stage. Emma is a risk management professional, but not a chemical engineering expert. She has
assembled a team of engineering experts and stakeholders to identify the risk associated with the
process by subdividing the process into components and reviewing each component and then
recommend solutions. Which one of the following team approaches to risk identification has Emma
chosen?
A. Delphi technique
B. SWOT analysis
C. Scenario analysis
D. HAZOP approach - ✔✔D
