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ARM 402 Successfully Treating Risk Exam Test
Bank A with 200 Recent Exam Questions and
Correct Answers/ ARM 402 Exam Test Bank
Risk Treatment - ...ANSWER...✓✓ The selection and
implementation of actions to help manage or mitigate a
risk.
Residual Risk - ...ANSWER...✓✓ The level of risk
remaining after actions are taken to alter the level of risk.
Avoidance - ...ANSWER...✓✓ A risk control technique that
involves ceasing or never undertaking an activity so that
the possibility of a future loss occurring from that activity
is eliminated.
Loss Prevention - ...ANSWER...✓✓ A risk control
technique that reduces the frequency of a particular loss.
Loss Reduction - ...ANSWER...✓✓ A risk control
technique that reduces the severity of a particular loss.
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Risk Transfer - ...ANSWER...✓✓ The shifting of risk from
one individual or organization to another.
Retention - ...ANSWER...✓✓ A risk financing technique
that involves assumption of risk in which gains and
losses are retained within the organization.
Risk Financing - ...ANSWER...✓✓ A risk management
technique that includes steps to pay for or transfer the
cost of losses.
Internet of Things (IoT) - ...ANSWER...✓✓ A network of
objects that transmit data to computers.
Telematics - ...ANSWER...✓✓ The use of technological
devices in vehicles with wireless communication and GPS
tracking that transmit data to businesses or government
agencies; some return information for the driver.
Machine Learning - ...ANSWER...✓✓ Artificial intelligence
in which computers continually teach themselves to make
better decisions based on previous results and new data.
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Hedging - ...ANSWER...✓✓ A financial transaction in
which one asset is held to offset the risk associated with
another asset.
Derivative - ...ANSWER...✓✓ A financial instrument
whose value is derived from the value of an underlying
asset, which can be an index, an asset, yield on an asset,
weather conditions, inflation, loans, bonds, an insurance
risk, or other items.
Diversification - ...ANSWER...✓✓ A risk control technique
that spreads loss exposures over numerous projects,
products, markets, or regions.
Pure Risk - ...ANSWER...✓✓ A chance of loss or no loss,
but no chance of gain.
Speculative Risk - ...ANSWER...✓✓ A chance of loss, no
loss, or gain.
Covariance - ...ANSWER...✓✓ The relative association
between variables to move in tandem or independently of
each other.
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Correlation - ...ANSWER...✓✓ A relationship between
variables.
Insurance - ...ANSWER...✓✓ A risk management
technique that transfers the potential financial
consequences of certain specified loss exposures from
the insured to the insurer.
Excess Liability Policy - ...ANSWER...✓✓ A policy that
covers liability claims in excess of the limits of an
underlying policy or a stated retention amount.
Layering - ...ANSWER...✓✓ Successive levels (or layers)
of coverage using an excess of loss strategy in which
each layer is in excess of the lower limits provided by
another insurer, resulting in a structured program of high
limits of coverage.
Working Layers - ...ANSWER...✓✓ The layers of coverage
in an organization's insurance program that are most
often called on to pay claims.
ARM 402 Successfully Treating Risk Exam Test
Bank A with 200 Recent Exam Questions and
Correct Answers/ ARM 402 Exam Test Bank
Risk Treatment - ...ANSWER...✓✓ The selection and
implementation of actions to help manage or mitigate a
risk.
Residual Risk - ...ANSWER...✓✓ The level of risk
remaining after actions are taken to alter the level of risk.
Avoidance - ...ANSWER...✓✓ A risk control technique that
involves ceasing or never undertaking an activity so that
the possibility of a future loss occurring from that activity
is eliminated.
Loss Prevention - ...ANSWER...✓✓ A risk control
technique that reduces the frequency of a particular loss.
Loss Reduction - ...ANSWER...✓✓ A risk control
technique that reduces the severity of a particular loss.
,2|Page
Risk Transfer - ...ANSWER...✓✓ The shifting of risk from
one individual or organization to another.
Retention - ...ANSWER...✓✓ A risk financing technique
that involves assumption of risk in which gains and
losses are retained within the organization.
Risk Financing - ...ANSWER...✓✓ A risk management
technique that includes steps to pay for or transfer the
cost of losses.
Internet of Things (IoT) - ...ANSWER...✓✓ A network of
objects that transmit data to computers.
Telematics - ...ANSWER...✓✓ The use of technological
devices in vehicles with wireless communication and GPS
tracking that transmit data to businesses or government
agencies; some return information for the driver.
Machine Learning - ...ANSWER...✓✓ Artificial intelligence
in which computers continually teach themselves to make
better decisions based on previous results and new data.
,3|Page
Hedging - ...ANSWER...✓✓ A financial transaction in
which one asset is held to offset the risk associated with
another asset.
Derivative - ...ANSWER...✓✓ A financial instrument
whose value is derived from the value of an underlying
asset, which can be an index, an asset, yield on an asset,
weather conditions, inflation, loans, bonds, an insurance
risk, or other items.
Diversification - ...ANSWER...✓✓ A risk control technique
that spreads loss exposures over numerous projects,
products, markets, or regions.
Pure Risk - ...ANSWER...✓✓ A chance of loss or no loss,
but no chance of gain.
Speculative Risk - ...ANSWER...✓✓ A chance of loss, no
loss, or gain.
Covariance - ...ANSWER...✓✓ The relative association
between variables to move in tandem or independently of
each other.
, 4|Page
Correlation - ...ANSWER...✓✓ A relationship between
variables.
Insurance - ...ANSWER...✓✓ A risk management
technique that transfers the potential financial
consequences of certain specified loss exposures from
the insured to the insurer.
Excess Liability Policy - ...ANSWER...✓✓ A policy that
covers liability claims in excess of the limits of an
underlying policy or a stated retention amount.
Layering - ...ANSWER...✓✓ Successive levels (or layers)
of coverage using an excess of loss strategy in which
each layer is in excess of the lower limits provided by
another insurer, resulting in a structured program of high
limits of coverage.
Working Layers - ...ANSWER...✓✓ The layers of coverage
in an organization's insurance program that are most
often called on to pay claims.
