ARM 401 EXAM PRACTICE TEST QUESTIONS WITH
100% COMPLETE SOLUTIONS VERIFIED AND
ALREADY GRADED A+
"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 - CORRECT ANSWER=> B"
"Risk maps differ from other risk assessment tools and techniques in which one of the following ways?
A. Risk maps dissect processes within the organization from input to output for the purpose of improving
them.
B. Risk maps identify, prioritize, and quantify risks in a two-dimensional pictorial that illustrates
frequency and severity on vertical and horizontal axes.
C. Risk maps have the potential to identify both negative risks and opportunity risks.
D. Risk maps are able to quickly explore a vast number of possible outcomes based on large datasets. -
CORRECT ANSWER=> B"
"As a best practice, a risk register should be an interactive computer system. Which one of the following
individuals should be responsible for continually updating risk information?
A. Customer
B. Risk management professional
C. Risk owner
D. Chief executive officer - CORRECT ANSWER=> C"
"A tool developed at the risk owner level that links specific activities, processes, projects, or plans to a
list of identified risks and results of risk analysis and evaluation; and that is ultimately consolidated at the
enterprise level is called a
A. Risk report.
B. Risk map.
C. Risk matrix.
D. Risk register. - CORRECT ANSWER=> D"
"Which one of the following risk assessment tools has the potential to identify both negative risks and
opportunity risks?
A. Risk maps
B. Audits
C. Cause and effect analysis
D. Failure mode and effects analysis - CORRECT ANSWER=> B"
1|Page
,"Emma is a risk management professional at a chemical engineering organization. A new process is being
designed and Emma has been told that all risks must be identified and eliminated during the design
stage. Emma is a risk management professional, but not a chemical engineering expert. She has
assembled a team of engineering experts and stakeholders to identify the risk associated with the
process by subdividing the process into components and reviewing each component and then
recommend solutions. Which one of the following team approaches to risk identification has Emma
chosen?
A. Delphi technique
B. SWOT analysis
C. Scenario analysis
D. HAZOP approach - CORRECT ANSWER=> D"
"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 - CORRECT ANSWER=> D"
"Murray Trucking is interested in evaluating which risk factors are most likely to lead to the costliest
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 - CORRECT 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 - CORRECT ANSWER=> C"
2|Page
,"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 - CORRECT 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. -
CORRECT ANSWER=> B"
"Cotton Products Company manufactures cotton clothing, towels, sheets, and other cotton products. All
production takes place at one large multi-acre production facility. The risk manager of Cotton Products
Company called a meeting attended by her staff, the plant foreman, the plant safety engineer, and the
head of operations. She told the group that she wanted to analyze one problem-the top event-a
catastrophic fire at the production facility. The group discussed all the causes of failure and factors that
could contribute to the top event. The causes of the -top event- were listed, and methods of reducing
the likelihood and consequences of the event were examined. The technique the risk manager employed
is called
A. Failure mode and effects analysis (FMEA).
B. SWOT analysis.
C. Scenario analysis.
D. Fault tree analysis (FTA). - CORRECT ANSWER=> D"
"Home Appliance Company has decided to change its production method. Previously, small teams of
workers assembled washers, dryers, and dishwashers. Under the new production method, an assembly-
line will be used, with some functions performed by robotics. Before making the change, Home
Appliance Company has created a team of experts from company personnel to identify all of the risks
inherent in the new production method and to recommend measures to address these risks. The team
will assemble in a facilitated workshop and follow these steps:
Divide the production method into components
Review each component to identify risk
Identify causes and potential outcomes for each risk
Develop a solution for each risk.
This team approach is risk identification is called a
3|Page
, A. SWOT (strengths, weaknesses, opportunities, threats) analysis.
B. Delphi technique.
C. Facilitated workshop.
D. Hazard and operability (HAZOP) study. - CORRECT ANSWER=> D"
"SE Industries has identified windstorm as a risk. The risk manager has assembled a team to project the
potential consequences of windstorm. The team includes individuals from various functions within the
organization. Which one of the following team approaches to risk identification is SE Industries using?
A. Delphi technique
B. Scenario analysis
C. SWOT analysis
D. HAZOP - CORRECT ANSWER=> B"
"The risk management department at Computer Hardware Company uses risk maps to graph and
analyze the risks faced by the company. One area of special concern to the risk management team is the
difference between residual risk and optimum risk. This difference represents
A. The risk that cannot be altered and is retained by the firm.
B. The risk treatment opportunity to further reduce risk.
C. The risk that is handled, by default, through avoidance.
D. The potential risk that the organization does not currently face, but could face if conditions change. -
CORRECT ANSWER=> B"
"Which one of the following occurs when individuals, departments, or teams from different areas work
together to accomplish a shared organizational goal?
A. Collaboration
B. Coordination
C. Cooperation
D. Communication - CORRECT ANSWER=> A"
"Which one of the following is a technique used to provide a visual perspective of an organization's risks
and to prioritize those risks?
A. Risk mapping
B. Risk quadrants
C. Risk register
D. SWOT analysis - CORRECT ANSWER=> A"
"James is the risk manager for a large manufacturing organization with six locations. Each location has a
plant manager who is responsible for the operation of that location. James feels that the plant managers
are in the best position to identify and measure risk at their locations. He wants them to own the risk.
However, he is looking for a tool that will allow him to prioritize risk according to the potential effect on
the organization. James wants an interactive tool that will adequately identify the organization's risks,
and allow them to be measured based on likelihood and the level of risk to the organization. Which one
of the following is the most appropriate tool for James?
A. SWOT analysis
4|Page
100% COMPLETE SOLUTIONS VERIFIED AND
ALREADY GRADED A+
"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 - CORRECT ANSWER=> B"
"Risk maps differ from other risk assessment tools and techniques in which one of the following ways?
A. Risk maps dissect processes within the organization from input to output for the purpose of improving
them.
B. Risk maps identify, prioritize, and quantify risks in a two-dimensional pictorial that illustrates
frequency and severity on vertical and horizontal axes.
C. Risk maps have the potential to identify both negative risks and opportunity risks.
D. Risk maps are able to quickly explore a vast number of possible outcomes based on large datasets. -
CORRECT ANSWER=> B"
"As a best practice, a risk register should be an interactive computer system. Which one of the following
individuals should be responsible for continually updating risk information?
A. Customer
B. Risk management professional
C. Risk owner
D. Chief executive officer - CORRECT ANSWER=> C"
"A tool developed at the risk owner level that links specific activities, processes, projects, or plans to a
list of identified risks and results of risk analysis and evaluation; and that is ultimately consolidated at the
enterprise level is called a
A. Risk report.
B. Risk map.
C. Risk matrix.
D. Risk register. - CORRECT ANSWER=> D"
"Which one of the following risk assessment tools has the potential to identify both negative risks and
opportunity risks?
A. Risk maps
B. Audits
C. Cause and effect analysis
D. Failure mode and effects analysis - CORRECT ANSWER=> B"
1|Page
,"Emma is a risk management professional at a chemical engineering organization. A new process is being
designed and Emma has been told that all risks must be identified and eliminated during the design
stage. Emma is a risk management professional, but not a chemical engineering expert. She has
assembled a team of engineering experts and stakeholders to identify the risk associated with the
process by subdividing the process into components and reviewing each component and then
recommend solutions. Which one of the following team approaches to risk identification has Emma
chosen?
A. Delphi technique
B. SWOT analysis
C. Scenario analysis
D. HAZOP approach - CORRECT ANSWER=> D"
"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 - CORRECT ANSWER=> D"
"Murray Trucking is interested in evaluating which risk factors are most likely to lead to the costliest
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 - CORRECT 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 - CORRECT ANSWER=> C"
2|Page
,"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 - CORRECT 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. -
CORRECT ANSWER=> B"
"Cotton Products Company manufactures cotton clothing, towels, sheets, and other cotton products. All
production takes place at one large multi-acre production facility. The risk manager of Cotton Products
Company called a meeting attended by her staff, the plant foreman, the plant safety engineer, and the
head of operations. She told the group that she wanted to analyze one problem-the top event-a
catastrophic fire at the production facility. The group discussed all the causes of failure and factors that
could contribute to the top event. The causes of the -top event- were listed, and methods of reducing
the likelihood and consequences of the event were examined. The technique the risk manager employed
is called
A. Failure mode and effects analysis (FMEA).
B. SWOT analysis.
C. Scenario analysis.
D. Fault tree analysis (FTA). - CORRECT ANSWER=> D"
"Home Appliance Company has decided to change its production method. Previously, small teams of
workers assembled washers, dryers, and dishwashers. Under the new production method, an assembly-
line will be used, with some functions performed by robotics. Before making the change, Home
Appliance Company has created a team of experts from company personnel to identify all of the risks
inherent in the new production method and to recommend measures to address these risks. The team
will assemble in a facilitated workshop and follow these steps:
Divide the production method into components
Review each component to identify risk
Identify causes and potential outcomes for each risk
Develop a solution for each risk.
This team approach is risk identification is called a
3|Page
, A. SWOT (strengths, weaknesses, opportunities, threats) analysis.
B. Delphi technique.
C. Facilitated workshop.
D. Hazard and operability (HAZOP) study. - CORRECT ANSWER=> D"
"SE Industries has identified windstorm as a risk. The risk manager has assembled a team to project the
potential consequences of windstorm. The team includes individuals from various functions within the
organization. Which one of the following team approaches to risk identification is SE Industries using?
A. Delphi technique
B. Scenario analysis
C. SWOT analysis
D. HAZOP - CORRECT ANSWER=> B"
"The risk management department at Computer Hardware Company uses risk maps to graph and
analyze the risks faced by the company. One area of special concern to the risk management team is the
difference between residual risk and optimum risk. This difference represents
A. The risk that cannot be altered and is retained by the firm.
B. The risk treatment opportunity to further reduce risk.
C. The risk that is handled, by default, through avoidance.
D. The potential risk that the organization does not currently face, but could face if conditions change. -
CORRECT ANSWER=> B"
"Which one of the following occurs when individuals, departments, or teams from different areas work
together to accomplish a shared organizational goal?
A. Collaboration
B. Coordination
C. Cooperation
D. Communication - CORRECT ANSWER=> A"
"Which one of the following is a technique used to provide a visual perspective of an organization's risks
and to prioritize those risks?
A. Risk mapping
B. Risk quadrants
C. Risk register
D. SWOT analysis - CORRECT ANSWER=> A"
"James is the risk manager for a large manufacturing organization with six locations. Each location has a
plant manager who is responsible for the operation of that location. James feels that the plant managers
are in the best position to identify and measure risk at their locations. He wants them to own the risk.
However, he is looking for a tool that will allow him to prioritize risk according to the potential effect on
the organization. James wants an interactive tool that will adequately identify the organization's risks,
and allow them to be measured based on likelihood and the level of risk to the organization. Which one
of the following is the most appropriate tool for James?
A. SWOT analysis
4|Page
