ARM 401 Holistically Assessing Risk 2025 Latest
Exam Test Bank 1 with 214 Questions and Correct
Answers / ARM 401 Exam 2025-2026 Prep Qs and As
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 - 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
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
pg. 1
,B. SWOT analysis
C. Scenario analysis
D. HAZOP approach - ANSWER-D
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. - 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 - 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.
pg. 2
,C. Risk matrix.
D. Risk register. - ANSWER-D
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.
pg. 3
, 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
pg. 4
Exam Test Bank 1 with 214 Questions and Correct
Answers / ARM 401 Exam 2025-2026 Prep Qs and As
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 - 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
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
pg. 1
,B. SWOT analysis
C. Scenario analysis
D. HAZOP approach - ANSWER-D
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. - 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 - 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.
pg. 2
,C. Risk matrix.
D. Risk register. - ANSWER-D
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.
pg. 3
, 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
pg. 4
