ARM 400 EXAM 2026 Questions and
Answers
Encouraging the expression of feelings as well as facts and following up with
employees on the problems they report are two ways that managers and
supervisors can
A. Cultivate two-way communication.
B. Facilitate active listening.
C. Support diverse groups.
D. Maintain control of the conversation. - Correct answer-A. Cultivate two-way
communication.
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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,B. Set aside judgement
C. Set a clear communication objective
D. Deliver a message the recipient(s) want to hear - Correct answer-C. Set a clear
communication objective
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. - Correct answer-B. The relative accuracy of
predictions about future losses increases.
When communicating a decision up the organization's chain of command,
consulting with outside experts can help a risk management professional do which
one of the following?
A. Define the organization's risk appetite
B. Stay focused on the organization's objectives
C. Enhance stakeholders' confidence in the process
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,D. Seek feedback from stakeholders - Correct answer-C. Enhance stakeholders'
confidence in the process
Company G is a manufacturer of high profile golf equipment. The risk
management professional for Company G is concerned about loss of business
related to product design. Failing to respond to changing customer demand and
preferences in the design of golf clubs could cost Company G significant market
share. Categorized according to the quadrants of risk, this exposure to loss is
classified as
A. An operational risk.
B. A strategic risk.
C. A financial risk.
D. A hazard risk. - Correct answer-B. A strategic risk.
Which one of the following risk management objectives is critical for a
manufacturer seeking new capital from investors, stockholders, and creditors?
A. Social responsibility
B. Anticipate and recognize emerging risks
C. Eliminate downside risk
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, D. Reduce the deterrent effects of hazard risks - Correct answer-D. Reduce the
deterrent effects of hazard risks
In addition to metal detectors, many airports have installed a second type of
scanning technology for checked baggage and cargo. The checked bags and cargo
pass through a portal with scanners programmed to detect and test for explosive
trace fumes. These scanners, which detect explosives based on air samples, are an
example of what type of sensor used for risk assessment and control?
A. Radiant sensors.
B. Mechanical sensors.
C. Biochemical sensors.
D. Thermal sensors. - Correct answer-C. Biochemical sensors.
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.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
Answers
Encouraging the expression of feelings as well as facts and following up with
employees on the problems they report are two ways that managers and
supervisors can
A. Cultivate two-way communication.
B. Facilitate active listening.
C. Support diverse groups.
D. Maintain control of the conversation. - Correct answer-A. Cultivate two-way
communication.
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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,B. Set aside judgement
C. Set a clear communication objective
D. Deliver a message the recipient(s) want to hear - Correct answer-C. Set a clear
communication objective
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. - Correct answer-B. The relative accuracy of
predictions about future losses increases.
When communicating a decision up the organization's chain of command,
consulting with outside experts can help a risk management professional do which
one of the following?
A. Define the organization's risk appetite
B. Stay focused on the organization's objectives
C. Enhance stakeholders' confidence in the process
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,D. Seek feedback from stakeholders - Correct answer-C. Enhance stakeholders'
confidence in the process
Company G is a manufacturer of high profile golf equipment. The risk
management professional for Company G is concerned about loss of business
related to product design. Failing to respond to changing customer demand and
preferences in the design of golf clubs could cost Company G significant market
share. Categorized according to the quadrants of risk, this exposure to loss is
classified as
A. An operational risk.
B. A strategic risk.
C. A financial risk.
D. A hazard risk. - Correct answer-B. A strategic risk.
Which one of the following risk management objectives is critical for a
manufacturer seeking new capital from investors, stockholders, and creditors?
A. Social responsibility
B. Anticipate and recognize emerging risks
C. Eliminate downside risk
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, D. Reduce the deterrent effects of hazard risks - Correct answer-D. Reduce the
deterrent effects of hazard risks
In addition to metal detectors, many airports have installed a second type of
scanning technology for checked baggage and cargo. The checked bags and cargo
pass through a portal with scanners programmed to detect and test for explosive
trace fumes. These scanners, which detect explosives based on air samples, are an
example of what type of sensor used for risk assessment and control?
A. Radiant sensors.
B. Mechanical sensors.
C. Biochemical sensors.
D. Thermal sensors. - Correct answer-C. Biochemical sensors.
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.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
