ARM 401 EXAM PRACTICE QUESTIONS AND
ANSWERS 100% CORRECT VERIFIED
ANSWERS
◉ holistic approach to managing risk. Answer: -broader in scope,
managing all areas of the business, not just hazard risks
-encompasses the analysis and predictability of business processes
and organizational decisions
-mandates the collaboration of internal and external stakeholders to
identify, assess, and treat risks
-involves looking at what might be gained from decisions or actions
-can uncover inconsistencies in how a company managers loss
retention
-can help orgs better absorb losses
◉ strategic risk. Answer: -uncertainties associated with the
organization's long-term goals and management decisions
-may carry a greater risk dynamic, positive or negative, that the other
categories
◉ operational risk. Answer: uncertainties associated with the
organization's procedures, systems, and policies
,◉ financial risk. Answer: uncertainties associated with the
organization's financial activities
◉ today's conception of risk. Answer: incorporates the idea that
taking risks is fundamentally necessary for growth
◉ predictive modeling. Answer: can empower decision making by
uncovering previously imperceptible risk factors
◉ Internet of Things. Answer: network of devices that sense their
environment, process data, and share it instantly
◉ cloud computing. Answer: enables orgs to store and share data
through wireless internet and networking services
◉ blockchain technology. Answer: -facilitates secure transactions
without the need for a third party
-protects against cyber threats
-eliminates the need to verify the accuracy of risk management data
-lets risk managers spend more time on forward-looking functions
◉ what fuels the future of holistic risk management?. Answer: the
capture, storage, and analysis of data
◉ covariance. Answer: -the measure of how two random risk
variables will change in relation to each other
,-calculates correlation between the variables
◉ variance. Answer: -the spread of the data set, or how far apart the
numbers are in relation to the mean
◉ team approaches to risk identification. Answer: 1. facilitated
workshops
2. Delphi technique
3. scenario analysis
4. HAZOP
5. SWOT
◉ why is it important to take a team-oriented approach to identifying
risks?. Answer: -provide diverse perspectives on risks
-can reveal how risks are connected across an org, reducing the
likelihood for risks to be overlooked
◉ facilitated workshops. Answer: -a neutral party, who has no stake in
the outcome, administers the risk workshop and propels the group to
achieve its goal
-wise to include people from diverse groups
-can be used for a specific project or process, as well as to identify
those risks that affect overall org objectives
-if using to identify all org risks: facilitator must be skilled in risk ID
and management as well as group communication and be prepared for
a long-term project
, ◉ delphi technique. Answer: -uses the opinions of a select group of
experts to identify risks
-typically they don't meet but respond to a survey or inquiry instead
-question-and-response cycle: answer question anonymously, see
results, answer same question until reach consensus
-benefits: cost-effective, eliminates group bias and encourages
honesty by anonymity
-disadvantages: experts' opinions may be limited to their current
thinking on a subject
◉ scenario analysis. Answer: -identifies risks and predicts the
potential consequences of those specific risks
-can help identify a range of potential consequences and prioritize
risks
-benefit is it brings all the concerns of different parts of the org
together so they can be addressed as a whole
-should assemble an internal cross-functional team to get a
multidimensional view
-disadvantage: may be limited by the imagination and brainstorming
capabilities of the team selected
◉ HAZOP. Answer: -a comprehensive review of a process or system
-a team of subject matter experts and stakeholders identifies the risks
associated with a given process and recommends a solution
-primarily used to design complex, scientific systems
ANSWERS 100% CORRECT VERIFIED
ANSWERS
◉ holistic approach to managing risk. Answer: -broader in scope,
managing all areas of the business, not just hazard risks
-encompasses the analysis and predictability of business processes
and organizational decisions
-mandates the collaboration of internal and external stakeholders to
identify, assess, and treat risks
-involves looking at what might be gained from decisions or actions
-can uncover inconsistencies in how a company managers loss
retention
-can help orgs better absorb losses
◉ strategic risk. Answer: -uncertainties associated with the
organization's long-term goals and management decisions
-may carry a greater risk dynamic, positive or negative, that the other
categories
◉ operational risk. Answer: uncertainties associated with the
organization's procedures, systems, and policies
,◉ financial risk. Answer: uncertainties associated with the
organization's financial activities
◉ today's conception of risk. Answer: incorporates the idea that
taking risks is fundamentally necessary for growth
◉ predictive modeling. Answer: can empower decision making by
uncovering previously imperceptible risk factors
◉ Internet of Things. Answer: network of devices that sense their
environment, process data, and share it instantly
◉ cloud computing. Answer: enables orgs to store and share data
through wireless internet and networking services
◉ blockchain technology. Answer: -facilitates secure transactions
without the need for a third party
-protects against cyber threats
-eliminates the need to verify the accuracy of risk management data
-lets risk managers spend more time on forward-looking functions
◉ what fuels the future of holistic risk management?. Answer: the
capture, storage, and analysis of data
◉ covariance. Answer: -the measure of how two random risk
variables will change in relation to each other
,-calculates correlation between the variables
◉ variance. Answer: -the spread of the data set, or how far apart the
numbers are in relation to the mean
◉ team approaches to risk identification. Answer: 1. facilitated
workshops
2. Delphi technique
3. scenario analysis
4. HAZOP
5. SWOT
◉ why is it important to take a team-oriented approach to identifying
risks?. Answer: -provide diverse perspectives on risks
-can reveal how risks are connected across an org, reducing the
likelihood for risks to be overlooked
◉ facilitated workshops. Answer: -a neutral party, who has no stake in
the outcome, administers the risk workshop and propels the group to
achieve its goal
-wise to include people from diverse groups
-can be used for a specific project or process, as well as to identify
those risks that affect overall org objectives
-if using to identify all org risks: facilitator must be skilled in risk ID
and management as well as group communication and be prepared for
a long-term project
, ◉ delphi technique. Answer: -uses the opinions of a select group of
experts to identify risks
-typically they don't meet but respond to a survey or inquiry instead
-question-and-response cycle: answer question anonymously, see
results, answer same question until reach consensus
-benefits: cost-effective, eliminates group bias and encourages
honesty by anonymity
-disadvantages: experts' opinions may be limited to their current
thinking on a subject
◉ scenario analysis. Answer: -identifies risks and predicts the
potential consequences of those specific risks
-can help identify a range of potential consequences and prioritize
risks
-benefit is it brings all the concerns of different parts of the org
together so they can be addressed as a whole
-should assemble an internal cross-functional team to get a
multidimensional view
-disadvantage: may be limited by the imagination and brainstorming
capabilities of the team selected
◉ HAZOP. Answer: -a comprehensive review of a process or system
-a team of subject matter experts and stakeholders identifies the risks
associated with a given process and recommends a solution
-primarily used to design complex, scientific systems
