ARM 400
The points in time when the interruption would have the greatest impact, as well as the
operational impact, should be identified in a business impact analysis (BIA). A. What
continuity strategy to use.
B. Whether the exposures are external, internal, or project.
C. Who should be on the recovery team.
D. What the financial impact would be. - ANS-D. what the effect would be on money. A
corporate goal of a not-for-profit corporation most likely includes
A. Maximizing the corporation's economic value.
B. Maximizing the value of goods or services provided to constituencies.
C. maximizing the cash flow of the company. D. Maximizing the value of the corporation's
total economic value. - ANS-B. Maximizing the value of goods or services provided to
constituencies.
A holistic approach that allows companies to better withstand short-term shocks and help
ensure long-term business viability is known as
A. Business process management.
B. Strategic redeployment plan.
C. Organizational resiliency.
D. Preparedness planning - ANS-C. Organizational resiliency.
A risk management professional is identifying the organization's key stakeholders as part of
the enterprise risk management program. Which one of the following would be considered
an internal stakeholder?
A. Unions
B. General public
C. Stockholders
D. ANS-C's suppliers. Stockholders
According to the law of large numbers, as the number of exposure units insured increases,
A. The size of the average loss declines.
B. The relative accuracy of predictions about future losses increases.
C. The probability of an underwriting loss increases.
D. Fewer losses are expected to occur. - ANS-B. The relative accuracy of predictions
about future losses increases.
All of the following are true regarding the Federal Sentencing Guidelines, EXCEPT:
A. They require an organization to have written standards and procedures.
B. They are mandatory.
C. They can be used by federal courts.
D. They establish minimum components for an effective compliance program. - ANS-B.
They are mandatory.
AMRM Insurance Company sells insurance in Virginia, North Carolina, South Carolina, and
Georgia. The company has compiled a policyowner data base that can be used to send text
messages when hurricanes approach. The company provides early warnings, storm
updates from the National Weather Service, and hurricane safety measures. The company
,credits the system with reduced hurricane claims. The use of the texting system is an
example of
A. Artificial intelligence.
B. Preventive analytics.
C. Experience rating.
D. ANS-B sensor networks Preventive analytics.
At Westside Company (Westside), the evaluation of internal controls has been delegated to
an independent auditor. The auditor has found that the board of directors of Westside have
approved a framework that requires management to have documented internal reporting
controls to guarantee compliance with regulations, accurate financial statements, and
efficient operations. The framework is applied at the entity and divisional levels, but not the
operating unit or functional levels. Since the program is new, no monitoring has been done
yet. The auditor is likely to report that
A. The selected method does not align with the Committee of Sponsoring Organizations of
the Treadway Commission's (COSO) Internal Control—Integrated Framework. It must also
be applied at the operating unit level, but not the functional level. Monitoring must be done
on a regular basis. B. The method that was chosen is not in line with the ANS-B Committee
of Sponsoring Organizations. The selected method does not align with the Committee of
Sponsoring Organizations of the Treadway Commission's (COSO) Internal
Control—Integrated Framework because it must also be applied at the operating unit and
functional levels and it must be monitored.
An organization has established a key performance indicator to "reduce employee injuries
by 6%." For this KPI, which of the following would indicate a low risk tolerance? A. Reduce
employee injuries by 2%
B. Reduce employee injuries by 4%
C. Reduce employee injuries by 5 to 6%
D. Employee injury rate remains unchanged - ANS-C. Reduce workplace injuries by 5 to 6
percent. By establishing and achieving measurable standards for the many activities it
engages in, an organization can achieve its goals and objectives. Which one of the following
statements is correct with respect to those standards?
A. A key performance indicator (KPI) answers the question, "What will make our
organization a success?"
B. Organizations with key performance indicators (KPIs) established for critical success
factors (CSFs) will typically achieve organizational goals.
C. There is a tolerance level for how much deviation from the KPI's standard will be
acceptable for each key performance indicator (KPI). D. Generally, an organization's risk
tolerance has little impact on its critical success factors (CSFs) and key performance
indicators (KPIs). - ANS-C. There is a tolerance level for how much deviation from the KPI's
standard will be acceptable for each key performance indicator (KPI). An organization's
goals and objectives are met by establishing and attaining measurable standards for the
many activities it pursues. Which one of the following statements is correct with respect to
those standards?
A. Organizations with key performance indicators (KPIs) established for critical success
factors (CSFs) will typically achieve organizational goals.
B. The answer to the question, "What will make our organization successful?" is a key
performance indicator (KPI). C. Generally, an organization's risk tolerance has little impact
on its critical success factors (CSFs) and key performance indicators (KPIs).
, D. For each key performance indicator (KPI), there is a tolerance level for how much
deviation from the standard established in the KPI will be acceptable. - ANS-D. For each
key performance indicator (KPI), there is a tolerance level for how much deviation from the
standard established in the KPI will be acceptable.
Based on Basel III principles, which one of the following groups should take the lead in
establishing a strong risk management culture?
A. Managers of risks B. Board of directors
C. Employees
D. Senior management - ANS-B. Board of directors
Before speaking with a group or individual, the speaker should think about what he or she
wants the other person(s) to do as a result of the conversation. Which one of the following
steps in the communication process does the speaker complete by doing this?
A. Analyze your audience
B. Set aside judgement
C. Set a clear communication objective
D. Deliver a message the recipient(s) want to hear - ANS-C. Set a clear communication
objective
Cheryl Babson works in internal control at Software Company. She contacted security at
the company and requested that they immediately detain a software engineer in his office.
As part of the internal control process, Cheryl had scanning software installed at the
company that randomly searched all e-mails and text messages sent from on-site, searching
for key words. The scanning software detected the words: "gun," "bomb," "revenge," and
"kill" in communications sent from the engineer's office. In the engineer's office, a pipe
bomb, two loaded handguns, and a loaded assault rifle were discovered by company
security. He admitted to planning an attack on the workplace later that day in the company
cafeteria. The emerging technology Cheryl deployed is called
A. Analytics of data. B. Radio frequency identification.
C. Natural language processing.
D. Computer simulation. - ANS-C. Natural language processing.
Klee, the claim representative, is currently evaluating a newly assigned auto liability claim
involving a two-car collision. He discovers that the insured was clearly 100 percent at fault
for the accident and although nobody was injured, it is company policy for him to set a $500
reserve. Klee sets the reserve and then calls the insured driver involved in the accident for a
recorded statement. During the conversation with the insured driver, Klee takes it upon
himself to recommend a company-approved collision center where the insured driver can
have her vehicle repaired to pre-accident condition. Klee's application of setting reserves
and mentioning the collision repair center would best represent which two compliance
requirements in this case?
A. Internal and mandatory
B. Internal and voluntary
C. voluntary and external D. External and mandatory - ANS-B. Internal and voluntary
Colossal Casualty Insurance Company decided to conduct an internal audit of the
company's operations. As part of the internal audit, several fictitious claims were submitted
to the claims department to see if the claims would be approved and paid. Which
component of internal control of the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) was examined by this internal audit test? A. Control
environment.
B. Information and communication.
The points in time when the interruption would have the greatest impact, as well as the
operational impact, should be identified in a business impact analysis (BIA). A. What
continuity strategy to use.
B. Whether the exposures are external, internal, or project.
C. Who should be on the recovery team.
D. What the financial impact would be. - ANS-D. what the effect would be on money. A
corporate goal of a not-for-profit corporation most likely includes
A. Maximizing the corporation's economic value.
B. Maximizing the value of goods or services provided to constituencies.
C. maximizing the cash flow of the company. D. Maximizing the value of the corporation's
total economic value. - ANS-B. Maximizing the value of goods or services provided to
constituencies.
A holistic approach that allows companies to better withstand short-term shocks and help
ensure long-term business viability is known as
A. Business process management.
B. Strategic redeployment plan.
C. Organizational resiliency.
D. Preparedness planning - ANS-C. Organizational resiliency.
A risk management professional is identifying the organization's key stakeholders as part of
the enterprise risk management program. Which one of the following would be considered
an internal stakeholder?
A. Unions
B. General public
C. Stockholders
D. ANS-C's suppliers. Stockholders
According to the law of large numbers, as the number of exposure units insured increases,
A. The size of the average loss declines.
B. The relative accuracy of predictions about future losses increases.
C. The probability of an underwriting loss increases.
D. Fewer losses are expected to occur. - ANS-B. The relative accuracy of predictions
about future losses increases.
All of the following are true regarding the Federal Sentencing Guidelines, EXCEPT:
A. They require an organization to have written standards and procedures.
B. They are mandatory.
C. They can be used by federal courts.
D. They establish minimum components for an effective compliance program. - ANS-B.
They are mandatory.
AMRM Insurance Company sells insurance in Virginia, North Carolina, South Carolina, and
Georgia. The company has compiled a policyowner data base that can be used to send text
messages when hurricanes approach. The company provides early warnings, storm
updates from the National Weather Service, and hurricane safety measures. The company
,credits the system with reduced hurricane claims. The use of the texting system is an
example of
A. Artificial intelligence.
B. Preventive analytics.
C. Experience rating.
D. ANS-B sensor networks Preventive analytics.
At Westside Company (Westside), the evaluation of internal controls has been delegated to
an independent auditor. The auditor has found that the board of directors of Westside have
approved a framework that requires management to have documented internal reporting
controls to guarantee compliance with regulations, accurate financial statements, and
efficient operations. The framework is applied at the entity and divisional levels, but not the
operating unit or functional levels. Since the program is new, no monitoring has been done
yet. The auditor is likely to report that
A. The selected method does not align with the Committee of Sponsoring Organizations of
the Treadway Commission's (COSO) Internal Control—Integrated Framework. It must also
be applied at the operating unit level, but not the functional level. Monitoring must be done
on a regular basis. B. The method that was chosen is not in line with the ANS-B Committee
of Sponsoring Organizations. The selected method does not align with the Committee of
Sponsoring Organizations of the Treadway Commission's (COSO) Internal
Control—Integrated Framework because it must also be applied at the operating unit and
functional levels and it must be monitored.
An organization has established a key performance indicator to "reduce employee injuries
by 6%." For this KPI, which of the following would indicate a low risk tolerance? A. Reduce
employee injuries by 2%
B. Reduce employee injuries by 4%
C. Reduce employee injuries by 5 to 6%
D. Employee injury rate remains unchanged - ANS-C. Reduce workplace injuries by 5 to 6
percent. By establishing and achieving measurable standards for the many activities it
engages in, an organization can achieve its goals and objectives. Which one of the following
statements is correct with respect to those standards?
A. A key performance indicator (KPI) answers the question, "What will make our
organization a success?"
B. Organizations with key performance indicators (KPIs) established for critical success
factors (CSFs) will typically achieve organizational goals.
C. There is a tolerance level for how much deviation from the KPI's standard will be
acceptable for each key performance indicator (KPI). D. Generally, an organization's risk
tolerance has little impact on its critical success factors (CSFs) and key performance
indicators (KPIs). - ANS-C. There is a tolerance level for how much deviation from the KPI's
standard will be acceptable for each key performance indicator (KPI). An organization's
goals and objectives are met by establishing and attaining measurable standards for the
many activities it pursues. Which one of the following statements is correct with respect to
those standards?
A. Organizations with key performance indicators (KPIs) established for critical success
factors (CSFs) will typically achieve organizational goals.
B. The answer to the question, "What will make our organization successful?" is a key
performance indicator (KPI). C. Generally, an organization's risk tolerance has little impact
on its critical success factors (CSFs) and key performance indicators (KPIs).
, D. For each key performance indicator (KPI), there is a tolerance level for how much
deviation from the standard established in the KPI will be acceptable. - ANS-D. For each
key performance indicator (KPI), there is a tolerance level for how much deviation from the
standard established in the KPI will be acceptable.
Based on Basel III principles, which one of the following groups should take the lead in
establishing a strong risk management culture?
A. Managers of risks B. Board of directors
C. Employees
D. Senior management - ANS-B. Board of directors
Before speaking with a group or individual, the speaker should think about what he or she
wants the other person(s) to do as a result of the conversation. Which one of the following
steps in the communication process does the speaker complete by doing this?
A. Analyze your audience
B. Set aside judgement
C. Set a clear communication objective
D. Deliver a message the recipient(s) want to hear - ANS-C. Set a clear communication
objective
Cheryl Babson works in internal control at Software Company. She contacted security at
the company and requested that they immediately detain a software engineer in his office.
As part of the internal control process, Cheryl had scanning software installed at the
company that randomly searched all e-mails and text messages sent from on-site, searching
for key words. The scanning software detected the words: "gun," "bomb," "revenge," and
"kill" in communications sent from the engineer's office. In the engineer's office, a pipe
bomb, two loaded handguns, and a loaded assault rifle were discovered by company
security. He admitted to planning an attack on the workplace later that day in the company
cafeteria. The emerging technology Cheryl deployed is called
A. Analytics of data. B. Radio frequency identification.
C. Natural language processing.
D. Computer simulation. - ANS-C. Natural language processing.
Klee, the claim representative, is currently evaluating a newly assigned auto liability claim
involving a two-car collision. He discovers that the insured was clearly 100 percent at fault
for the accident and although nobody was injured, it is company policy for him to set a $500
reserve. Klee sets the reserve and then calls the insured driver involved in the accident for a
recorded statement. During the conversation with the insured driver, Klee takes it upon
himself to recommend a company-approved collision center where the insured driver can
have her vehicle repaired to pre-accident condition. Klee's application of setting reserves
and mentioning the collision repair center would best represent which two compliance
requirements in this case?
A. Internal and mandatory
B. Internal and voluntary
C. voluntary and external D. External and mandatory - ANS-B. Internal and voluntary
Colossal Casualty Insurance Company decided to conduct an internal audit of the
company's operations. As part of the internal audit, several fictitious claims were submitted
to the claims department to see if the claims would be approved and paid. Which
component of internal control of the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) was examined by this internal audit test? A. Control
environment.
B. Information and communication.
