ARM 400 LATEST 2026 CORE EXAM MANUAL QUESTIONS
AND ANSWERS MARKED A+
✔✔Diversifiable Risk - ✔✔Risk that is not highly correlated, gains or losses tend to
occur randomly and be isolated, and risks can be managed through diversification or
spread of risk
✔✔Nondiversifiable Risk - ✔✔Inflation, unemployment, and natural disasters such as
hurricanes - they are correlated
✔✔Systemic Risks - ✔✔Generally nondiversifiable; the potential for a major disruption
in the function of an entire market or financial system
✔✔Hazard Risks (PURE) - ✔✔Risks that arise from property, liability, or personnel loss
exposures and are generally the subject of insurance
✔✔Operational Risks (PURE) - ✔✔Risks that fall outside the hazard risk category and
arise from people or failure in processes, systems, or controls including those involving
technology
✔✔Financial Risks (SPECULATIVE) - ✔✔Risks that arise from effect of market forces
on assets/liabilities and includes market risk and liquidity risk
✔✔Market Risk (SPECULATIVE) - ✔✔Uncertainty about an investment's future value
because of potential changes in the market for that type of investment
✔✔Liquidity Risk (SPECULATIVE) - ✔✔Risk that an asset cannot be sold on short
notice without incurring a loss
✔✔Strategic Risk (SPECULATIVE) - ✔✔Risks that arise from trends in the economy
and society, including changes in the economic, political, and competitive environments,
as well as from demographic shifts
✔✔Risk Management Framework - ✔✔The foundation for applying the risk
management process throughout the organization; Based on how well it is working and
on significant changes in the organization's external and internal environments
✔✔Risk Criteria - ✔✔Information used as a basis for measuring the significance of risk
✔✔Internal Control - ✔✔System or process that an organization uses to achieve its
operational goals, internal and external financial reporting goals, or legal and regulatory
compliance goals
✔✔RiskTech - ✔✔Risk monitoring and mitigation technology
, ✔✔InsurTech - ✔✔The use of emerging technologies in the insurance industry
✔✔Smart Products - ✔✔An innovative item that uses sensors; wireless sensor
networks; and data collection, transmission, and analysis to further enable the item to
be faster, more useful, or otherwise improved
✔✔Sensors - ✔✔A device that detects and measures stimuli in its environment
✔✔Preventative Analytics - ✔✔Statistical and analytical techniques used to influence or
prevent future events and behaviors
✔✔Transducer - ✔✔A device that converts one form of energy into another
✔✔Actuators - ✔✔A mechanical device that turns energy into motion or otherwise
effectuates a change in position or rotation using a signal and an energy source
✔✔Accelerometers - ✔✔A device that measures acceleration, motion, and tilt
✔✔Sensor Categories - ✔✔Mechanical
Biochemical
Thermal
Radiant
✔✔Computer Vision - ✔✔Technology that stimulates human vision; gains an
understanding of images and tries to help a machine recognize an object and give that
object context and respond to it as a human would
✔✔Ergonomics - ✔✔The science of designing work space and equipment based on the
needs of the people who use the work space and equipment
✔✔Stakeholders - ✔✔Any individual or organization that is directly or indirectly involved
with or affected by organizational decisions or activities
✔✔SWOT - ✔✔Strengths
Weaknesses
Opportunities
Threats
✔✔Risk Center - ✔✔A discrete unit within an organization, having a lender and specific
objectives at which level a particular risk (or group of risks) is most appropriately and
effectively managed
AND ANSWERS MARKED A+
✔✔Diversifiable Risk - ✔✔Risk that is not highly correlated, gains or losses tend to
occur randomly and be isolated, and risks can be managed through diversification or
spread of risk
✔✔Nondiversifiable Risk - ✔✔Inflation, unemployment, and natural disasters such as
hurricanes - they are correlated
✔✔Systemic Risks - ✔✔Generally nondiversifiable; the potential for a major disruption
in the function of an entire market or financial system
✔✔Hazard Risks (PURE) - ✔✔Risks that arise from property, liability, or personnel loss
exposures and are generally the subject of insurance
✔✔Operational Risks (PURE) - ✔✔Risks that fall outside the hazard risk category and
arise from people or failure in processes, systems, or controls including those involving
technology
✔✔Financial Risks (SPECULATIVE) - ✔✔Risks that arise from effect of market forces
on assets/liabilities and includes market risk and liquidity risk
✔✔Market Risk (SPECULATIVE) - ✔✔Uncertainty about an investment's future value
because of potential changes in the market for that type of investment
✔✔Liquidity Risk (SPECULATIVE) - ✔✔Risk that an asset cannot be sold on short
notice without incurring a loss
✔✔Strategic Risk (SPECULATIVE) - ✔✔Risks that arise from trends in the economy
and society, including changes in the economic, political, and competitive environments,
as well as from demographic shifts
✔✔Risk Management Framework - ✔✔The foundation for applying the risk
management process throughout the organization; Based on how well it is working and
on significant changes in the organization's external and internal environments
✔✔Risk Criteria - ✔✔Information used as a basis for measuring the significance of risk
✔✔Internal Control - ✔✔System or process that an organization uses to achieve its
operational goals, internal and external financial reporting goals, or legal and regulatory
compliance goals
✔✔RiskTech - ✔✔Risk monitoring and mitigation technology
, ✔✔InsurTech - ✔✔The use of emerging technologies in the insurance industry
✔✔Smart Products - ✔✔An innovative item that uses sensors; wireless sensor
networks; and data collection, transmission, and analysis to further enable the item to
be faster, more useful, or otherwise improved
✔✔Sensors - ✔✔A device that detects and measures stimuli in its environment
✔✔Preventative Analytics - ✔✔Statistical and analytical techniques used to influence or
prevent future events and behaviors
✔✔Transducer - ✔✔A device that converts one form of energy into another
✔✔Actuators - ✔✔A mechanical device that turns energy into motion or otherwise
effectuates a change in position or rotation using a signal and an energy source
✔✔Accelerometers - ✔✔A device that measures acceleration, motion, and tilt
✔✔Sensor Categories - ✔✔Mechanical
Biochemical
Thermal
Radiant
✔✔Computer Vision - ✔✔Technology that stimulates human vision; gains an
understanding of images and tries to help a machine recognize an object and give that
object context and respond to it as a human would
✔✔Ergonomics - ✔✔The science of designing work space and equipment based on the
needs of the people who use the work space and equipment
✔✔Stakeholders - ✔✔Any individual or organization that is directly or indirectly involved
with or affected by organizational decisions or activities
✔✔SWOT - ✔✔Strengths
Weaknesses
Opportunities
Threats
✔✔Risk Center - ✔✔A discrete unit within an organization, having a lender and specific
objectives at which level a particular risk (or group of risks) is most appropriately and
effectively managed
