ARM 402 Exam Questions and Answers
with Verified Solutions | Latest Updated
2026
The selection and Risk Treatment
implementation of actions to
help manage or mitigate a
risk.
The level of risk remaining Residual Risk
after actions are taken to alter
the level of risk.
Avoidance, modification, 5 common ways risk managers treat
transfer, retention, or (for risk
opportunities) exploitation.
A risk control technique that Risk Avoidance
involves ceasing or never
undertaking an activity so that
the possibility of a future loss
occurring from that activity is
eliminated.
identifies four broad Prouty Approach
categories of loss frequency
and three broad categories of
loss severity
1) slight-losses that can be Prouty's 3 categories of loss severity
retained easily 2)
,significant-part of the loss
must be transferred 3)
severe-the organization's
survival depends on the
transfer of loss
1) Almost nil-extremely Prouty's 4 categories of loss
unlikely to occur 2) frequency
Slight-could occur, but hasn't
3) Moderate-occurs
occasionally 4) Definite-occurs
regularly
A process to increase Risk Modification
likelihood and/or
consequences from positive or
negative outcome
buying insurance to shift the Risk Transfer
risk of financial loss to an
insurance
company-transferring the risk
to another party (budgeting
for the cost)
accepting that some risks Risk Retention
simply arise in the course of
one's life and consciously
retaining that risk-assumption
of risk in which gains and
losses are retained within the
organization
, A risk management strategy Risk exploitation
for making a positive
uncertainty more likely to
occur
refers to techniques that Risk Financing
provide for payment of losses
after they occur
risk retention and modification Duplication
technique that creates
backups of exposure units
(duplication/separation/diversificatio
n are all techniques)
- Creating copies of asset so if
the primary asset is
threatened the organization
will still have the data/use
available-good for
files/documents
Mitigating and retention that Separation
physically divides so the asset
or activity isn't all impacted at
once
A financial transaction in Hedging
which one asset is held to
offset the risk associated with
another asset.
derivatives used to reduce a credit derivatives
lender's exposure to credit risk
with Verified Solutions | Latest Updated
2026
The selection and Risk Treatment
implementation of actions to
help manage or mitigate a
risk.
The level of risk remaining Residual Risk
after actions are taken to alter
the level of risk.
Avoidance, modification, 5 common ways risk managers treat
transfer, retention, or (for risk
opportunities) exploitation.
A risk control technique that Risk Avoidance
involves ceasing or never
undertaking an activity so that
the possibility of a future loss
occurring from that activity is
eliminated.
identifies four broad Prouty Approach
categories of loss frequency
and three broad categories of
loss severity
1) slight-losses that can be Prouty's 3 categories of loss severity
retained easily 2)
,significant-part of the loss
must be transferred 3)
severe-the organization's
survival depends on the
transfer of loss
1) Almost nil-extremely Prouty's 4 categories of loss
unlikely to occur 2) frequency
Slight-could occur, but hasn't
3) Moderate-occurs
occasionally 4) Definite-occurs
regularly
A process to increase Risk Modification
likelihood and/or
consequences from positive or
negative outcome
buying insurance to shift the Risk Transfer
risk of financial loss to an
insurance
company-transferring the risk
to another party (budgeting
for the cost)
accepting that some risks Risk Retention
simply arise in the course of
one's life and consciously
retaining that risk-assumption
of risk in which gains and
losses are retained within the
organization
, A risk management strategy Risk exploitation
for making a positive
uncertainty more likely to
occur
refers to techniques that Risk Financing
provide for payment of losses
after they occur
risk retention and modification Duplication
technique that creates
backups of exposure units
(duplication/separation/diversificatio
n are all techniques)
- Creating copies of asset so if
the primary asset is
threatened the organization
will still have the data/use
available-good for
files/documents
Mitigating and retention that Separation
physically divides so the asset
or activity isn't all impacted at
once
A financial transaction in Hedging
which one asset is held to
offset the risk associated with
another asset.
derivatives used to reduce a credit derivatives
lender's exposure to credit risk
