ARM 400 UPDATED EXAM SCRIPT QUESTIONS AND
ANSWERS MARKED A+
✔✔Liquidity Risk - ✔✔The risk that an asset cannot be sold on short notice without
incurring a loss
✔✔Process for Managing Risk (5 steps) - ✔✔1. Scan Environment
2. identify Risk
3. Analyze Risk
4. Treat Risks
5. Monitor & Review
✔✔Risk Management Framework - ✔✔A foundation for applying the risk management
process throughout the organization.
✔✔Risk Criteria - ✔✔Information used as a basis for measuring the significance of a
risk
✔✔Major options to treat risk (5) - ✔✔1. Avoid the risk
2. Modify the likelihood and/ or impact of the risk
3. Transfer the risk
4. Retain the risk
5. Exploit the risk
✔✔Factors to consider when defining a companies risk criteria (6) - ✔✔1. Causes of
risk
2. Effects of risk
3. Metrics used to measure effects of risk
4. Timeframe of potential effects
5. Methods to determine level of risk
6. Approach to combinations of risk
✔✔Process of risk identification of several keys risks within an organization -
✔✔Communication between departmental stakeholder (understand their perspective of
most pressing risks they face), external experts (shine light on emerging risks not
anticipated or known about) & Collaborating with senior management (ensure risk
associated with the organization's strategy are identified)
✔✔Risk analysis - ✔✔Applying the defined risk criteria to determine the source, cause,
likelihood, and potential consequences of each of the identified risks. Depending on the
circumstances, this analysis can be quantitative, qualitative, or both. Quantitative
analysis, in particular, may entail interacting with experts.
✔✔4 results of effective workplace communication - ✔✔1. increases productivity
2. reduces confusion
, 3. Mitigates conflict
4. improves morale
✔✔5 steps of the communication process - ✔✔1. Clear communication objectives
2. Analyze audience
3. Decide when and where to talk
4. Pay attention to your body language
5. Ask for feedback to ensure it was understood
✔✔3 elements of active listening - ✔✔Attention, suspension of judgement and response
✔✔nondirective techniques of communication - ✔✔don't direct the flow of the
conservation
✔✔Types of nondirective communication - ✔✔open ended questions, asking for
clarification, reflecting on the input of others and empathizing
✔✔Internal Control - ✔✔A system or process that an organization uses to achieve its
operational goals, internal and external financial reporting goals or legal and regulatory
compliance goals
✔✔Enterprise risk management (ERM) - ✔✔holistic approach to risk management with
includes scanning the environment & communicating/ collaborating with internal and
external stakeholders
✔✔Scan the Environment - ✔✔seeking input from experts within and outside the risk
professional's organization
✔✔Scan the Environment (Internally) - ✔✔Help define the organization's risk appetite,
which in turn determines how to handle certain risks.
✔✔Scan the Environment (Externally) - ✔✔helps reveal potential risks an organization
might not otherwise be aware of, such as legislation regarding a particular industry or
regulations that may affect operations.
✔✔Internal Controls - ✔✔System of process used to achieve operational, financial,
legal of regulatory goals
✔✔Benefits of collaboration with data analysts - ✔✔analysts can identify trends and
predict possible outcomes that can help the organization avoid the related risks.
✔✔Insurance primary deals with which type of risk - ✔✔Pure Risk
ANSWERS MARKED A+
✔✔Liquidity Risk - ✔✔The risk that an asset cannot be sold on short notice without
incurring a loss
✔✔Process for Managing Risk (5 steps) - ✔✔1. Scan Environment
2. identify Risk
3. Analyze Risk
4. Treat Risks
5. Monitor & Review
✔✔Risk Management Framework - ✔✔A foundation for applying the risk management
process throughout the organization.
✔✔Risk Criteria - ✔✔Information used as a basis for measuring the significance of a
risk
✔✔Major options to treat risk (5) - ✔✔1. Avoid the risk
2. Modify the likelihood and/ or impact of the risk
3. Transfer the risk
4. Retain the risk
5. Exploit the risk
✔✔Factors to consider when defining a companies risk criteria (6) - ✔✔1. Causes of
risk
2. Effects of risk
3. Metrics used to measure effects of risk
4. Timeframe of potential effects
5. Methods to determine level of risk
6. Approach to combinations of risk
✔✔Process of risk identification of several keys risks within an organization -
✔✔Communication between departmental stakeholder (understand their perspective of
most pressing risks they face), external experts (shine light on emerging risks not
anticipated or known about) & Collaborating with senior management (ensure risk
associated with the organization's strategy are identified)
✔✔Risk analysis - ✔✔Applying the defined risk criteria to determine the source, cause,
likelihood, and potential consequences of each of the identified risks. Depending on the
circumstances, this analysis can be quantitative, qualitative, or both. Quantitative
analysis, in particular, may entail interacting with experts.
✔✔4 results of effective workplace communication - ✔✔1. increases productivity
2. reduces confusion
, 3. Mitigates conflict
4. improves morale
✔✔5 steps of the communication process - ✔✔1. Clear communication objectives
2. Analyze audience
3. Decide when and where to talk
4. Pay attention to your body language
5. Ask for feedback to ensure it was understood
✔✔3 elements of active listening - ✔✔Attention, suspension of judgement and response
✔✔nondirective techniques of communication - ✔✔don't direct the flow of the
conservation
✔✔Types of nondirective communication - ✔✔open ended questions, asking for
clarification, reflecting on the input of others and empathizing
✔✔Internal Control - ✔✔A system or process that an organization uses to achieve its
operational goals, internal and external financial reporting goals or legal and regulatory
compliance goals
✔✔Enterprise risk management (ERM) - ✔✔holistic approach to risk management with
includes scanning the environment & communicating/ collaborating with internal and
external stakeholders
✔✔Scan the Environment - ✔✔seeking input from experts within and outside the risk
professional's organization
✔✔Scan the Environment (Internally) - ✔✔Help define the organization's risk appetite,
which in turn determines how to handle certain risks.
✔✔Scan the Environment (Externally) - ✔✔helps reveal potential risks an organization
might not otherwise be aware of, such as legislation regarding a particular industry or
regulations that may affect operations.
✔✔Internal Controls - ✔✔System of process used to achieve operational, financial,
legal of regulatory goals
✔✔Benefits of collaboration with data analysts - ✔✔analysts can identify trends and
predict possible outcomes that can help the organization avoid the related risks.
✔✔Insurance primary deals with which type of risk - ✔✔Pure Risk
