ARM 402 Exam 2025-2026 Test Bank B / ARM 402
Successfully Treating Risk Exam Test Bank B with
200 Recent Exam Questions and Correct Answers
Once a holistic risk management program is created and put into effect, which one
of the following methods can be used to allow constant and consistent monitoring
of the process?
A. Bow-tie diagram
B. Feedback loop
C. Dashboard reporting
D. SWOT analysis - ANSWER-B
When Taylor completes his SWOT analysis in which quadrant of the SWOT
analysis will he place reputation?
a. Threat
b. Strength
c. Opportunities
d. Weakness - ANSWER-B
Victor is the risk manager for Jones Incorporated. He decided that a bow-tie
diagram would be the best method to convey a potential risk to the executive team.
Victor will use the bow-tie diagram to do which one of the following?
A. To provide the team with all of the information it needs to know about the risk
within a very brief period of time
B. To identify the risk and list its possible causes and possible consequences on
either side
C. To depict the likeliness that the risk will occur
pg. 1
,D. To consistently monitor risk exposures and the controls in place - ANSWER-B
A risk control technique that reduces the severity of a particular loss is
A. Loss reduction.
B. Loss prevention.
C. Duplication.
D. Diversification. - ANSWER-A
Advancements in machine learning and artificial intelligence (AI) have helped
insurers do all of the following, EXCEPT:
A. Price insurance policies more precisely
B. Completely prevent customers' risk
C. Customize policies to more closely align with customers' actual risk
D. Deliver policy information and payment options to a mobile device -
ANSWER-B
A local shopping center reduced its net income loss after a fire by incurring
additional expenses to shorten the time it takes to repair the damage and reopen the
shopping center. Bob, the owner of the center, hired a contractor to work around
the clock until repairs were completed. This reduced Bob's net income loss because
he was able to repair the shops sooner. Bob's action is an example of which one of
the following risk management techniques?
A. Loss prevention
B. Avoidance
C. Diversification
D. Loss reduction - ANSWER-D
pg. 2
,Conor needs to deliver an important message to his staff. He has scheduled a
meeting in a conference room with his staff of 10 individuals. Which one of the
following is the best way for Conor to use his body language to convey confidence
in his message and interest in his staff?
A. Conor should walk around the room standing over different individuals as he
speaks.
B. Conor should sit up and lean slightly toward the audience.
C. Conor should keep his hands folded on the table to avoid distracting motions.
D. Conor should sit at the end of the table leaning back in his chair. - ANSWER-B
Jepson Manufacturing Company is a U.S.-based company with operations in
Mexico, Canada, Brazil, and the Netherlands. Jepson purchases a nonadmitted
policy in the U.S. and policies from admitted insurers in each of the countries in
which it operates. This collection of admitted and nonadmitted policies used by
multinational businesses is called
A. A facultative insurance program.
B. An enterprise risk management program.
C. A pure excess insurance program.
D. A controlled master program. - ANSWER-D
Commercial general liability insurance policies written on an occurrence basis
apply to bodily injury and property damage that occurs during the policy period.
This provision supports the principle that insurable loss exposures must ideally be
A. Fortuitous.
B. Pure risks.
C. Definite.
D. Independent. - ANSWER-C
Ideally insurable loss exposures are subject to losses that
pg. 3
, A. Occur gradually over long periods of time.
B. Are definite in time, cause, and location.
C. Result from unidentifiable causes.
D. Are immeasurable in terms of frequency or severity. - ANSWER-B
One of the basic forms for an excess liability policy that is subject to the same
provisions as the underlying liability policy is the
A. Monoline form.
B. Following-form.
C. Self-contained form.
D. Manuscript form. - ANSWER-B
Telematics devices allow organizations to accurately identify patterns of risk and
predict risk for which one of the following types of loss exposures?
A. Automobile
B. Property
C. Workers compensation
D. Business income - ANSWER-A
Which one of the following is a major benefit that smart insurance contracts can
provide to insurance customers?
A. Smart contracts can render a risk completely preventable.
B. Smart contracts can provide broader coverage at a lower cost.
C. Smart contracts can dramatically increase the speed of loss payments.
D. Smart contracts can significantly increase the speed of premium payments. -
ANSWER-C
pg. 4
Successfully Treating Risk Exam Test Bank B with
200 Recent Exam Questions and Correct Answers
Once a holistic risk management program is created and put into effect, which one
of the following methods can be used to allow constant and consistent monitoring
of the process?
A. Bow-tie diagram
B. Feedback loop
C. Dashboard reporting
D. SWOT analysis - ANSWER-B
When Taylor completes his SWOT analysis in which quadrant of the SWOT
analysis will he place reputation?
a. Threat
b. Strength
c. Opportunities
d. Weakness - ANSWER-B
Victor is the risk manager for Jones Incorporated. He decided that a bow-tie
diagram would be the best method to convey a potential risk to the executive team.
Victor will use the bow-tie diagram to do which one of the following?
A. To provide the team with all of the information it needs to know about the risk
within a very brief period of time
B. To identify the risk and list its possible causes and possible consequences on
either side
C. To depict the likeliness that the risk will occur
pg. 1
,D. To consistently monitor risk exposures and the controls in place - ANSWER-B
A risk control technique that reduces the severity of a particular loss is
A. Loss reduction.
B. Loss prevention.
C. Duplication.
D. Diversification. - ANSWER-A
Advancements in machine learning and artificial intelligence (AI) have helped
insurers do all of the following, EXCEPT:
A. Price insurance policies more precisely
B. Completely prevent customers' risk
C. Customize policies to more closely align with customers' actual risk
D. Deliver policy information and payment options to a mobile device -
ANSWER-B
A local shopping center reduced its net income loss after a fire by incurring
additional expenses to shorten the time it takes to repair the damage and reopen the
shopping center. Bob, the owner of the center, hired a contractor to work around
the clock until repairs were completed. This reduced Bob's net income loss because
he was able to repair the shops sooner. Bob's action is an example of which one of
the following risk management techniques?
A. Loss prevention
B. Avoidance
C. Diversification
D. Loss reduction - ANSWER-D
pg. 2
,Conor needs to deliver an important message to his staff. He has scheduled a
meeting in a conference room with his staff of 10 individuals. Which one of the
following is the best way for Conor to use his body language to convey confidence
in his message and interest in his staff?
A. Conor should walk around the room standing over different individuals as he
speaks.
B. Conor should sit up and lean slightly toward the audience.
C. Conor should keep his hands folded on the table to avoid distracting motions.
D. Conor should sit at the end of the table leaning back in his chair. - ANSWER-B
Jepson Manufacturing Company is a U.S.-based company with operations in
Mexico, Canada, Brazil, and the Netherlands. Jepson purchases a nonadmitted
policy in the U.S. and policies from admitted insurers in each of the countries in
which it operates. This collection of admitted and nonadmitted policies used by
multinational businesses is called
A. A facultative insurance program.
B. An enterprise risk management program.
C. A pure excess insurance program.
D. A controlled master program. - ANSWER-D
Commercial general liability insurance policies written on an occurrence basis
apply to bodily injury and property damage that occurs during the policy period.
This provision supports the principle that insurable loss exposures must ideally be
A. Fortuitous.
B. Pure risks.
C. Definite.
D. Independent. - ANSWER-C
Ideally insurable loss exposures are subject to losses that
pg. 3
, A. Occur gradually over long periods of time.
B. Are definite in time, cause, and location.
C. Result from unidentifiable causes.
D. Are immeasurable in terms of frequency or severity. - ANSWER-B
One of the basic forms for an excess liability policy that is subject to the same
provisions as the underlying liability policy is the
A. Monoline form.
B. Following-form.
C. Self-contained form.
D. Manuscript form. - ANSWER-B
Telematics devices allow organizations to accurately identify patterns of risk and
predict risk for which one of the following types of loss exposures?
A. Automobile
B. Property
C. Workers compensation
D. Business income - ANSWER-A
Which one of the following is a major benefit that smart insurance contracts can
provide to insurance customers?
A. Smart contracts can render a risk completely preventable.
B. Smart contracts can provide broader coverage at a lower cost.
C. Smart contracts can dramatically increase the speed of loss payments.
D. Smart contracts can significantly increase the speed of premium payments. -
ANSWER-C
pg. 4
