ARM 401 EXAM PRACTICE QUESTIONS AND
ANSWERS 2026/2027 SOLVED 100%
CORRECT
◉ A risk map showing a large difference between inherent and
residual risk indicates which one of the following?
A. The risk is within the organization's risk appetite
B. The current risk treatment is ineffective
C. The current risk treatment is effective
D. The risk does not need to be treated. Answer: C
◉ Lucas, a risk professional for Jones Incorporated, recently met with
experts from the utility industry to discuss the potential loss of supply
and risks to the infrastructure. Lucas must now decide which risks,
and proposed treatments, need to be communicated to the board of
Jones Incorporated. Lucas should make this decision based on
A. The supply source involved.
B. The organization's risk appetite and tolerance levels.
C. Whether the risk in natural or man-made.
D. Whether any government regulations are involved or not.. Answer:
B
◉ SoCal Movie Company produces movies at a studio in Southern
California. The risk manager decided to identify the range of potential
,consequences associated with various risks that the company faces.
For example, if a severe earthquake occurred while the company was
filming a movie, there could be deaths and injuries, destruction of
movie sets, delays in production, costs associated with filming at an
alternative location, and loss of reputation and good will. The type of
analysis performed by the risk manager is called
A. SWOT analysis.
B. Scenario analysis.
C. Sensitivity analysis.
D. HAZOP analysis.. Answer: B
◉ Insurance Company (IC) sells its coverages through independent
insurance agents. Independent agents represent several insurance
companies. Tom, the president of IC, has learned that the independent
agent who is the highest producer for IC is considering selling his
agency. IC is considering acquiring the agency since Tom is
concerned that if the agency is sold, IC may lose a substantial amount
of business. Tom asked IC's risk manager to analyze the prospective
purchase. The analysis revealed that the acquisition would likely
secure most of IC's book of business with the agency but also
revealed local competitors that would try to place the business as
well. In addition, the analysis revealed the opportunity for IC to move
some accounts currently placed with other insurers over to IC. Also, it
was learned that a competitor expressed an interest in the agency
acquisition. The analysis performed by the risk manager is a. Answer:
D
◉ Murray Trucking is interested in evaluating which risk factors are
most likely to lead to the most costly accidents. They are evaluating
,risk factors such as speed, weather conditions, driver experience,
distance traveled, and gross vehicle weight. Which one of the
following statistical measurements would be useful for the risk
manager when calculating the probability of the different risk factors
causing severe accidents?
A. Telematics
B. Inverse covariance
C. Variance
D. Monte Carlo simulation. Answer: C
◉ Blithe Manufacturing has experienced a drop in market share. The
marketing department has come up with a way to differentiate their
product in order to regain market share. Blithe has assembled a team
of individuals representing different organizational functions to
analyze both internal and external factors of the new product and
decide whether or not it is feasible. Which one of the following team
approaches to risk identification is Blithe using?
A. Delphi technique
B. HAZOP workshop
C. SWOT analysis
D. Scenario analysis. Answer: C
◉ William is a project manager for Parker International. He has been
assigned a key project with a short deadline. William realizes that this
project is going to require revising the job duties of some individuals
and a collaborative effort from of all team members. When revising
job duties, William should do which one of the following?
, A. Overload some individuals with more work than others
B. Try to enrich individuals' work rather than merely expand it
C. Rely on the most senior individuals to take on additional duties
D. Focus on the individuals' personality rather than results. Answer: B
◉ Shelton Manufacturing executives are growing increasingly
concerned about wildfires and the potential effects on supply chain
management. As the risk professional, Carla has been asked to meet
with experts on the subject and report back to the executive team.
Which one of the following should Carla do before meeting with
external wildfire experts?
A. Carla should speak with internal subject-matter experts in hopes
that she can avoid needing the external wildfire experts.
B. Carla should research the field and get a working understanding of
wildfires.
C. Carla should solicit questions from internal experts and submit
them to the external wildfire experts.
D. Carla should try to learn as much as possible about wildfires, so
she can impress the wildfire experts.. Answer: B
◉ An organization practicing holistic risk management would assess
the cost of raw materials and foreign exchange risk under which one
of the following quadrants of risk?
A. Strategic risk
B. Financial risk
C. Operational risk
D. Hazard risk. Answer: B
ANSWERS 2026/2027 SOLVED 100%
CORRECT
◉ A risk map showing a large difference between inherent and
residual risk indicates which one of the following?
A. The risk is within the organization's risk appetite
B. The current risk treatment is ineffective
C. The current risk treatment is effective
D. The risk does not need to be treated. Answer: C
◉ Lucas, a risk professional for Jones Incorporated, recently met with
experts from the utility industry to discuss the potential loss of supply
and risks to the infrastructure. Lucas must now decide which risks,
and proposed treatments, need to be communicated to the board of
Jones Incorporated. Lucas should make this decision based on
A. The supply source involved.
B. The organization's risk appetite and tolerance levels.
C. Whether the risk in natural or man-made.
D. Whether any government regulations are involved or not.. Answer:
B
◉ SoCal Movie Company produces movies at a studio in Southern
California. The risk manager decided to identify the range of potential
,consequences associated with various risks that the company faces.
For example, if a severe earthquake occurred while the company was
filming a movie, there could be deaths and injuries, destruction of
movie sets, delays in production, costs associated with filming at an
alternative location, and loss of reputation and good will. The type of
analysis performed by the risk manager is called
A. SWOT analysis.
B. Scenario analysis.
C. Sensitivity analysis.
D. HAZOP analysis.. Answer: B
◉ Insurance Company (IC) sells its coverages through independent
insurance agents. Independent agents represent several insurance
companies. Tom, the president of IC, has learned that the independent
agent who is the highest producer for IC is considering selling his
agency. IC is considering acquiring the agency since Tom is
concerned that if the agency is sold, IC may lose a substantial amount
of business. Tom asked IC's risk manager to analyze the prospective
purchase. The analysis revealed that the acquisition would likely
secure most of IC's book of business with the agency but also
revealed local competitors that would try to place the business as
well. In addition, the analysis revealed the opportunity for IC to move
some accounts currently placed with other insurers over to IC. Also, it
was learned that a competitor expressed an interest in the agency
acquisition. The analysis performed by the risk manager is a. Answer:
D
◉ Murray Trucking is interested in evaluating which risk factors are
most likely to lead to the most costly accidents. They are evaluating
,risk factors such as speed, weather conditions, driver experience,
distance traveled, and gross vehicle weight. Which one of the
following statistical measurements would be useful for the risk
manager when calculating the probability of the different risk factors
causing severe accidents?
A. Telematics
B. Inverse covariance
C. Variance
D. Monte Carlo simulation. Answer: C
◉ Blithe Manufacturing has experienced a drop in market share. The
marketing department has come up with a way to differentiate their
product in order to regain market share. Blithe has assembled a team
of individuals representing different organizational functions to
analyze both internal and external factors of the new product and
decide whether or not it is feasible. Which one of the following team
approaches to risk identification is Blithe using?
A. Delphi technique
B. HAZOP workshop
C. SWOT analysis
D. Scenario analysis. Answer: C
◉ William is a project manager for Parker International. He has been
assigned a key project with a short deadline. William realizes that this
project is going to require revising the job duties of some individuals
and a collaborative effort from of all team members. When revising
job duties, William should do which one of the following?
, A. Overload some individuals with more work than others
B. Try to enrich individuals' work rather than merely expand it
C. Rely on the most senior individuals to take on additional duties
D. Focus on the individuals' personality rather than results. Answer: B
◉ Shelton Manufacturing executives are growing increasingly
concerned about wildfires and the potential effects on supply chain
management. As the risk professional, Carla has been asked to meet
with experts on the subject and report back to the executive team.
Which one of the following should Carla do before meeting with
external wildfire experts?
A. Carla should speak with internal subject-matter experts in hopes
that she can avoid needing the external wildfire experts.
B. Carla should research the field and get a working understanding of
wildfires.
C. Carla should solicit questions from internal experts and submit
them to the external wildfire experts.
D. Carla should try to learn as much as possible about wildfires, so
she can impress the wildfire experts.. Answer: B
◉ An organization practicing holistic risk management would assess
the cost of raw materials and foreign exchange risk under which one
of the following quadrants of risk?
A. Strategic risk
B. Financial risk
C. Operational risk
D. Hazard risk. Answer: B
