ARM 401 FINAL EXAM 2026/2027 PAPER QUESTIONS
AND SOLUTIONS RATED A+
✔✔The descriptive approach is applied
A. When an insurer or risk manager is deciding what type of computer technology to
purchase.
B. When an insurer or risk manager has a specific problem.
C. Repeatedly to provide information for data-driven decision making.
D. To process information received from the Internet of Things. - ✔✔B
✔✔A predictive approach to data analytics involves
A. Providing a method to be used repeatedly to provide information.
B. Providing information to solve a particular problem.
C. Providing sensors that predict accidents.
D. Providing a computer program to gather information from the Internet. - ✔✔A
✔✔Location is a key pre-loss activity to control earthquake damage because
A. Designs for earthquake-resistant buildings are ineffective.
B. The availability of construction operations in a location is crucial.
C. Structures situated on stable earth can absorb most earthquake shock waves.
D. The availability of other temporary facilities helps an organization return to operations
more quickly. - ✔✔C
✔✔Buildings constructed of reinforced concrete have been successful withstanding this
disaster, but building all structures in this manner is neither practical nor economical.
This statement pertains to which one of the following disasters?
A. Hurricane
B. Fire
C. Explosion
D. Tornado - ✔✔D
✔✔The risk management professional for a large multi-location super market chain in
the New England area observed that all of the buildings have a flat roof. His concern is
primarily due to the possible loss resulting from
A. Flood.
B. Earthquake.
C. Weight of snow, sleet, and ice.
D. Fire and lightening. - ✔✔C
✔✔Which one of the following types of property has no physical form?
A. Real property
B. Tangible property
C. Uninsurable property
D. Intangible property - ✔✔D
,✔✔Risk managers can have a hard time valuing which one of the following types of
property due to the unique features of each tract?
A. Real property
B. Unimproved structures
C. Unimproved land
D. Intellectual property - ✔✔C
✔✔Until a replacement for a key employee who has resigned or retired can be found
and trained, the human resource potential of an organization is
A. Unaffected; only the individual productive potential is affected.
B. Improved, since a new hire often brings new skills and knowledge.
C. Unknown and not important to an organization's success.
D. Reduced due to a loss of that person's knowledge and future contributions. - ✔✔D
✔✔Which one of the following statements is true regarding sources of risk affecting
property exposures?
A. Deliberate acts of individuals or groups are generally considered natural risk sources.
B. Physical risks to property can generally be broken into two categories: natural and
mechanical.
C. Risk control techniques can usually manage the likelihood and consequences of
human risk sources to some extent.
D. Risk management has little, if any, effect on controlling the consequences of events
caused by natural sources. - ✔✔C
✔✔Which one of the following valuation standards is most appropriate for valuing
products that are relatively indistinguishable from one another, such as agricultural
products, oil, or precious metals?
A. Functional replacement cost
B. Market value
C. Economic value
D. Book value - ✔✔B
✔✔A specific observable action to discriminate against a person or class of persons is
A. Overt impact.
B. Disparate impact.
C. Disparate treatment.
D. Overt discrimination. - ✔✔D
✔✔The Life Safety Code requires that many buildings or structures should have
A. A minimum of one means of egress.
B. Doorways not leading to exits.
C. Fire alarms.
D. Exits that rely on a single safeguard. - ✔✔C
,✔✔A female supervisor consistently reprimands male, but not female, employees for
using the Internet for personal use. This is an example of
A. Disparate impact.
B. Overt discrimination.
C. Disparate treatment.
D. Sexual harassment. - ✔✔C
✔✔Traunton Manufacturing is considering a new manufacturing process that involves
the use of a highly explosive chemical. After much analysis, Traunton abandons the
idea in favor of a process that does not use the chemical. The risk control technique
Traunton has chosen to address the human resource risk is
A. Separation.
B. Loss reduction.
C. Avoidance.
D. Loss prevention. - ✔✔C
✔✔Some buildings have modest economic value but still have high replacement costs.
One prime reason for this might be because of
A. Condemnation proceedings.
B. Construction styles that are simple and modest.
C. Construction styles that are large or ornate.
D. Declining tax assessments on valued property. - ✔✔C
✔✔Gwynn is the Personnel Director of a large company. She has received three
employee complaints involving the same supervisor for using offensive sexual humor
repeatedly. Gwynn is concerned about which one of the following types of claims?
A. Poor work conditions
B. Sexual harassment
C. Wrongful discharge
D. Workplace violence - ✔✔B
✔✔One of the characteristics of individuals and groups of individuals that affects
susceptibility to injury or death caused by a building fire is
A. Educational level.
B. Occupation.
C. Gender.
D. Age. - ✔✔D
✔✔Jemma has two pairs of earrings she wants to ensure against theft. Jemma's
earrings are categorized as
A. Intangible property.
B. Community property.
C. Real property.
D. Personal property. - ✔✔D
, ✔✔The risk control measures used to protect people and property from the adverse
effects of hostile fires are collectively called
A. Loss control.
B. Fire safety.
C. Life safety.
D. Loss prevention. - ✔✔B
✔✔This earthquake-resistant construction relies on the resilience of steel or specially
designed reinforced concrete to absorb energy, undergo considerable distortion, and
return to its original shape. Which one of the following describes this type of design?
A. Modified earthquake design
B. Masonry design
C. Box action design
D. Frame action design - ✔✔D
✔✔Certain types of property losses such as drought, flood, and earthquake are referred
to as natural because
A. There is no way to reduce its impact.
B. It has a clear beginning and end.
C. It is beyond human control.
D. There is no way to mitigate the damages. - ✔✔C
✔✔The amount that property is worth based on the ability of the property to produce
income is known as its
A. Economic value.
B. Market value.
C. Net present value.
D. Book value. - ✔✔A
✔✔When a clothing manufacturer decides to expand the sale of its clothing line by
offering internet purchases, it creates new exposures not otherwise covered, or not fully
covered, by a traditional policy. These include
A. Loss or damage caused by computer viruses.
B. Lightning damage to the computer system used for internet sales.
C. Theft of clothing items in their store.
D. Fire damage to clothing items currently listed for sale online. - ✔✔A
✔✔Mike is the new risk manager for ABC Web Hosting, LLC. ABC develops and hosts
Web sites for many different organizations. Mike took over the risk manager position
from Tom, who was let go for poor performance.
XYZ Retailer was one customer for whom ABC built a Web site. Recently, XYZ Retailer
accused ABC of not building a secure site. As a result of the site not being secure, XYZ
Retailer claims that its sales have decreased dramatically. XYZ also contends that the
personal information of many of its customers was compromised and, now, XYZ is
AND SOLUTIONS RATED A+
✔✔The descriptive approach is applied
A. When an insurer or risk manager is deciding what type of computer technology to
purchase.
B. When an insurer or risk manager has a specific problem.
C. Repeatedly to provide information for data-driven decision making.
D. To process information received from the Internet of Things. - ✔✔B
✔✔A predictive approach to data analytics involves
A. Providing a method to be used repeatedly to provide information.
B. Providing information to solve a particular problem.
C. Providing sensors that predict accidents.
D. Providing a computer program to gather information from the Internet. - ✔✔A
✔✔Location is a key pre-loss activity to control earthquake damage because
A. Designs for earthquake-resistant buildings are ineffective.
B. The availability of construction operations in a location is crucial.
C. Structures situated on stable earth can absorb most earthquake shock waves.
D. The availability of other temporary facilities helps an organization return to operations
more quickly. - ✔✔C
✔✔Buildings constructed of reinforced concrete have been successful withstanding this
disaster, but building all structures in this manner is neither practical nor economical.
This statement pertains to which one of the following disasters?
A. Hurricane
B. Fire
C. Explosion
D. Tornado - ✔✔D
✔✔The risk management professional for a large multi-location super market chain in
the New England area observed that all of the buildings have a flat roof. His concern is
primarily due to the possible loss resulting from
A. Flood.
B. Earthquake.
C. Weight of snow, sleet, and ice.
D. Fire and lightening. - ✔✔C
✔✔Which one of the following types of property has no physical form?
A. Real property
B. Tangible property
C. Uninsurable property
D. Intangible property - ✔✔D
,✔✔Risk managers can have a hard time valuing which one of the following types of
property due to the unique features of each tract?
A. Real property
B. Unimproved structures
C. Unimproved land
D. Intellectual property - ✔✔C
✔✔Until a replacement for a key employee who has resigned or retired can be found
and trained, the human resource potential of an organization is
A. Unaffected; only the individual productive potential is affected.
B. Improved, since a new hire often brings new skills and knowledge.
C. Unknown and not important to an organization's success.
D. Reduced due to a loss of that person's knowledge and future contributions. - ✔✔D
✔✔Which one of the following statements is true regarding sources of risk affecting
property exposures?
A. Deliberate acts of individuals or groups are generally considered natural risk sources.
B. Physical risks to property can generally be broken into two categories: natural and
mechanical.
C. Risk control techniques can usually manage the likelihood and consequences of
human risk sources to some extent.
D. Risk management has little, if any, effect on controlling the consequences of events
caused by natural sources. - ✔✔C
✔✔Which one of the following valuation standards is most appropriate for valuing
products that are relatively indistinguishable from one another, such as agricultural
products, oil, or precious metals?
A. Functional replacement cost
B. Market value
C. Economic value
D. Book value - ✔✔B
✔✔A specific observable action to discriminate against a person or class of persons is
A. Overt impact.
B. Disparate impact.
C. Disparate treatment.
D. Overt discrimination. - ✔✔D
✔✔The Life Safety Code requires that many buildings or structures should have
A. A minimum of one means of egress.
B. Doorways not leading to exits.
C. Fire alarms.
D. Exits that rely on a single safeguard. - ✔✔C
,✔✔A female supervisor consistently reprimands male, but not female, employees for
using the Internet for personal use. This is an example of
A. Disparate impact.
B. Overt discrimination.
C. Disparate treatment.
D. Sexual harassment. - ✔✔C
✔✔Traunton Manufacturing is considering a new manufacturing process that involves
the use of a highly explosive chemical. After much analysis, Traunton abandons the
idea in favor of a process that does not use the chemical. The risk control technique
Traunton has chosen to address the human resource risk is
A. Separation.
B. Loss reduction.
C. Avoidance.
D. Loss prevention. - ✔✔C
✔✔Some buildings have modest economic value but still have high replacement costs.
One prime reason for this might be because of
A. Condemnation proceedings.
B. Construction styles that are simple and modest.
C. Construction styles that are large or ornate.
D. Declining tax assessments on valued property. - ✔✔C
✔✔Gwynn is the Personnel Director of a large company. She has received three
employee complaints involving the same supervisor for using offensive sexual humor
repeatedly. Gwynn is concerned about which one of the following types of claims?
A. Poor work conditions
B. Sexual harassment
C. Wrongful discharge
D. Workplace violence - ✔✔B
✔✔One of the characteristics of individuals and groups of individuals that affects
susceptibility to injury or death caused by a building fire is
A. Educational level.
B. Occupation.
C. Gender.
D. Age. - ✔✔D
✔✔Jemma has two pairs of earrings she wants to ensure against theft. Jemma's
earrings are categorized as
A. Intangible property.
B. Community property.
C. Real property.
D. Personal property. - ✔✔D
, ✔✔The risk control measures used to protect people and property from the adverse
effects of hostile fires are collectively called
A. Loss control.
B. Fire safety.
C. Life safety.
D. Loss prevention. - ✔✔B
✔✔This earthquake-resistant construction relies on the resilience of steel or specially
designed reinforced concrete to absorb energy, undergo considerable distortion, and
return to its original shape. Which one of the following describes this type of design?
A. Modified earthquake design
B. Masonry design
C. Box action design
D. Frame action design - ✔✔D
✔✔Certain types of property losses such as drought, flood, and earthquake are referred
to as natural because
A. There is no way to reduce its impact.
B. It has a clear beginning and end.
C. It is beyond human control.
D. There is no way to mitigate the damages. - ✔✔C
✔✔The amount that property is worth based on the ability of the property to produce
income is known as its
A. Economic value.
B. Market value.
C. Net present value.
D. Book value. - ✔✔A
✔✔When a clothing manufacturer decides to expand the sale of its clothing line by
offering internet purchases, it creates new exposures not otherwise covered, or not fully
covered, by a traditional policy. These include
A. Loss or damage caused by computer viruses.
B. Lightning damage to the computer system used for internet sales.
C. Theft of clothing items in their store.
D. Fire damage to clothing items currently listed for sale online. - ✔✔A
✔✔Mike is the new risk manager for ABC Web Hosting, LLC. ABC develops and hosts
Web sites for many different organizations. Mike took over the risk manager position
from Tom, who was let go for poor performance.
XYZ Retailer was one customer for whom ABC built a Web site. Recently, XYZ Retailer
accused ABC of not building a secure site. As a result of the site not being secure, XYZ
Retailer claims that its sales have decreased dramatically. XYZ also contends that the
personal information of many of its customers was compromised and, now, XYZ is
