ARM 402 Exam Studyguide Questions with
100% Correct Verified Answers latest
update 2025
Which one of the following risk control techniques is generally used to
reduce the frequency of a particular loss?
A. Separation
B. Loss reduction
C. Avoidance
D. Loss prevention --- correct answer ---D
Which one of the following statements regarding correlation analysis is
true?
A. Because it incorporates so much data, a risk professional can rely on
correlation analysis only when making a major decision.
B. Abnormal observations and inaccurate data may skew correlation
analysis.
C. The range of correlation coefficients is from 0 to +1.
D. Correlation analysis can indicate causality between variables. --- correct
answer ---B
,When organizations invest their assets among a mix of stocks and bonds
from companies in different industry sectors they are using the risk
management technique of
A. Diversification.
B. Duplication.
C. Risk transfer.
D. Separation. --- correct answer ---A
Diversification is a risk control technique that
A. Spreads loss exposures over numerous projects, products, markets, or
regions.
B. Views the cause of accidents to be a result of business concentration and
vertical integration.
C. Produces a copy or backup and keeps it in reserve.
D. Divides an asset or operation into two or more separate units. --- correct
answer ---A
Victor is the risk manager for Jones Incorporated. He decided that a bow-tie
diagram would be the best method to convey a potential risk to the
executive team. Victor will use the bow-tie diagram to do which one of the
following?
A. To provide the team with all of the information it needs to know about
the risk within a very brief period of time
,B. To identify the risk and list its possible causes and possible consequences
on either side
C. To depict the likeliness that the risk will occur
D. To consistently monitor risk exposures and the controls in place ---
correct answer ---B
A risk control technique that reduces the severity of a particular loss is
A. Loss reduction.
B. Loss prevention.
C. Duplication.
D. Diversification. --- correct answer ---A
Advancements in machine learning and artificial intelligence (AI) have
helped insurers do all of the following, EXCEPT:
A. Price insurance policies more precisely
B. Completely prevent customers' risk
C. Customize policies to more closely align with customers' actual risk
D. Deliver policy information and payment options to a mobile device ---
correct answer ---B
A local shopping center reduced its net income loss after a fire by incurring
additional expenses to shorten the time it takes to repair the damage and
reopen the shopping center. Bob, the owner of the center, hired a contractor
, to work around the clock until repairs were completed. This reduced Bob's
net income loss because he was able to repair the shops sooner. Bob's action
is an example of which one of the following risk management techniques?
A. Loss prevention
B. Avoidance
C. Diversification
D. Loss reduction --- correct answer ---D
Conor needs to deliver an important message to his staff. He has scheduled
a meeting in a conference room with his staff of 10 individuals. Which one
of the following is the best way for Conor to use his body language to
convey confidence in his message and interest in his staff?
A. Conor should walk around the room standing over different individuals as
he speaks.
B. Conor should sit up and lean slightly toward the audience.
C. Conor should keep his hands folded on the table to avoid distracting
motions.
D. Conor should sit at the end of the table leaning back in his chair. ---
correct answer ---B
Jepson Manufacturing Company is a U.S.-based company with operations in
Mexico, Canada, Brazil, and the Netherlands. Jepson purchases a
nonadmitted policy in the U.S. and policies from admitted insurers in each
100% Correct Verified Answers latest
update 2025
Which one of the following risk control techniques is generally used to
reduce the frequency of a particular loss?
A. Separation
B. Loss reduction
C. Avoidance
D. Loss prevention --- correct answer ---D
Which one of the following statements regarding correlation analysis is
true?
A. Because it incorporates so much data, a risk professional can rely on
correlation analysis only when making a major decision.
B. Abnormal observations and inaccurate data may skew correlation
analysis.
C. The range of correlation coefficients is from 0 to +1.
D. Correlation analysis can indicate causality between variables. --- correct
answer ---B
,When organizations invest their assets among a mix of stocks and bonds
from companies in different industry sectors they are using the risk
management technique of
A. Diversification.
B. Duplication.
C. Risk transfer.
D. Separation. --- correct answer ---A
Diversification is a risk control technique that
A. Spreads loss exposures over numerous projects, products, markets, or
regions.
B. Views the cause of accidents to be a result of business concentration and
vertical integration.
C. Produces a copy or backup and keeps it in reserve.
D. Divides an asset or operation into two or more separate units. --- correct
answer ---A
Victor is the risk manager for Jones Incorporated. He decided that a bow-tie
diagram would be the best method to convey a potential risk to the
executive team. Victor will use the bow-tie diagram to do which one of the
following?
A. To provide the team with all of the information it needs to know about
the risk within a very brief period of time
,B. To identify the risk and list its possible causes and possible consequences
on either side
C. To depict the likeliness that the risk will occur
D. To consistently monitor risk exposures and the controls in place ---
correct answer ---B
A risk control technique that reduces the severity of a particular loss is
A. Loss reduction.
B. Loss prevention.
C. Duplication.
D. Diversification. --- correct answer ---A
Advancements in machine learning and artificial intelligence (AI) have
helped insurers do all of the following, EXCEPT:
A. Price insurance policies more precisely
B. Completely prevent customers' risk
C. Customize policies to more closely align with customers' actual risk
D. Deliver policy information and payment options to a mobile device ---
correct answer ---B
A local shopping center reduced its net income loss after a fire by incurring
additional expenses to shorten the time it takes to repair the damage and
reopen the shopping center. Bob, the owner of the center, hired a contractor
, to work around the clock until repairs were completed. This reduced Bob's
net income loss because he was able to repair the shops sooner. Bob's action
is an example of which one of the following risk management techniques?
A. Loss prevention
B. Avoidance
C. Diversification
D. Loss reduction --- correct answer ---D
Conor needs to deliver an important message to his staff. He has scheduled
a meeting in a conference room with his staff of 10 individuals. Which one
of the following is the best way for Conor to use his body language to
convey confidence in his message and interest in his staff?
A. Conor should walk around the room standing over different individuals as
he speaks.
B. Conor should sit up and lean slightly toward the audience.
C. Conor should keep his hands folded on the table to avoid distracting
motions.
D. Conor should sit at the end of the table leaning back in his chair. ---
correct answer ---B
Jepson Manufacturing Company is a U.S.-based company with operations in
Mexico, Canada, Brazil, and the Netherlands. Jepson purchases a
nonadmitted policy in the U.S. and policies from admitted insurers in each
