ARM 401 ACTUAL EXAM SOLVED
QUESTIONS COMPLETE STUDY GUIDE
●● The risk management department at Computer Hardware Company
uses risk maps to graph and analyze the risks faced by the company. One
area of special concern to the risk management team is the difference
between residual risk and optimum risk. This difference represents
A) The potential risk that the organization does not currently face, but
could face if conditions change
B) The risk treatment opportunity to further reduce risk
C) The risk that is handled, by default, through avoidance
D) The risk that cannot be altered and is retained by the firm
Answer: B) The risk treatment opportunity to further reduce risk
●● Shelton Manufacturing executives are growing increasingly
concerned about wildfires and the potential effects on supply chain
management. As the risk professional, Carla has been asked to meet with
experts on the subject and report back to the executive team. Which one
of the following should Carla do before meeting with external wildfire
experts?
A) Carla should try to learn as much as possible about wildfires so she
can impress the wildfire experts
,B) Carla should research the field and get a working understanding of
wildfires
C) Carla should solicit questions from internal experts and submit them
to the external wildfire experts
D) Carla should speak with internal subject-matter experts in hopes that
she can avoid needing the external wildfire experts
Answer: B) Carla should research the field and get a working
understanding of wildfires
●● Cotton Products Company manufactures cotton clothing, towels,
sheets, and other cotton products. All production takes place at one large
multi-acre production facility. The risk manager of Cotton Products
Company called a meeting attended by her staff, the plant foreman, the
plant safety engineer, and the head of operations. She told the group that
she wanted to analyze one problem-the top event-a catastrophic fire at
the production facility. The group discussed all the causes of failure and
factors that could contribute to the top event. The causes of the -top
event- were listed, and methods of reducing the likelihood and
consequences of the event were examined. The technique the risk
manager employed is called
A) Fault tree analysis
B) SWOT analysis
C) Failure mode and effects analysis
D) Scenario analysis
Answer: A) Fault tree analysis
,●● Northeast Urban Properties owns and operates office buildings in
New York, Boston, and Philadelphia. The risk manager decided to
examine the impact of potential terrorist attacks on each building. For
example, for the Philadelphia building, the risk manager examined
attacks at three levels: scare (e.g. suspicious package), minor explosion
or gas attack, and large-scale attack. For each level, the risk manager
listed the risk owners, the risk quadrants impacted, the likelihood of
attack, the consequence, the risk level, and the risk control measures that
needed to be implemented. This information was summarized in a one-
page chart. The chart the risk manager prepared is a
A) Risk report with warning color code
B) Risk matrix with value at risk
C) Risk register with scenario model
D) Risk map with simulation
Answer: Risk register with scenario model
●● William is a project manager for Parker International. He has been
assigned a key project with a short deadline. William realizes that this
project is going to require revising the job duties of some individuals
and a collaborative effort from of all team members. When revising job
duties, William should do which one of the following?
A) Try to enrich individuals' work rather than merely expand it
B) Rely on the most senior individuals to take on additional duties
, C) Overload some individuals with more work than others
D) Focus on the individuals' personalities rather than results
Answer: A) Try to enrich individuals' work rather than merely expand it
●● 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 product and decide whether
or not it is feasible. Which one of the following team approaches to risk
identification is Blithe using?
A) Delphi technique
B) SWOT analysis
C) Scenario analysis
D) HAZOP workshop
Answer: B) SWOT analysis
●● Risk management professionals can use risk mapping to identify
inherent risk and residual (current) level of risk. Inherent risk is
important because the difference between inherent and residual risk
provides a measure of
A) The necessity of risk financing
QUESTIONS COMPLETE STUDY GUIDE
●● The risk management department at Computer Hardware Company
uses risk maps to graph and analyze the risks faced by the company. One
area of special concern to the risk management team is the difference
between residual risk and optimum risk. This difference represents
A) The potential risk that the organization does not currently face, but
could face if conditions change
B) The risk treatment opportunity to further reduce risk
C) The risk that is handled, by default, through avoidance
D) The risk that cannot be altered and is retained by the firm
Answer: B) The risk treatment opportunity to further reduce risk
●● Shelton Manufacturing executives are growing increasingly
concerned about wildfires and the potential effects on supply chain
management. As the risk professional, Carla has been asked to meet with
experts on the subject and report back to the executive team. Which one
of the following should Carla do before meeting with external wildfire
experts?
A) Carla should try to learn as much as possible about wildfires so she
can impress the wildfire experts
,B) Carla should research the field and get a working understanding of
wildfires
C) Carla should solicit questions from internal experts and submit them
to the external wildfire experts
D) Carla should speak with internal subject-matter experts in hopes that
she can avoid needing the external wildfire experts
Answer: B) Carla should research the field and get a working
understanding of wildfires
●● Cotton Products Company manufactures cotton clothing, towels,
sheets, and other cotton products. All production takes place at one large
multi-acre production facility. The risk manager of Cotton Products
Company called a meeting attended by her staff, the plant foreman, the
plant safety engineer, and the head of operations. She told the group that
she wanted to analyze one problem-the top event-a catastrophic fire at
the production facility. The group discussed all the causes of failure and
factors that could contribute to the top event. The causes of the -top
event- were listed, and methods of reducing the likelihood and
consequences of the event were examined. The technique the risk
manager employed is called
A) Fault tree analysis
B) SWOT analysis
C) Failure mode and effects analysis
D) Scenario analysis
Answer: A) Fault tree analysis
,●● Northeast Urban Properties owns and operates office buildings in
New York, Boston, and Philadelphia. The risk manager decided to
examine the impact of potential terrorist attacks on each building. For
example, for the Philadelphia building, the risk manager examined
attacks at three levels: scare (e.g. suspicious package), minor explosion
or gas attack, and large-scale attack. For each level, the risk manager
listed the risk owners, the risk quadrants impacted, the likelihood of
attack, the consequence, the risk level, and the risk control measures that
needed to be implemented. This information was summarized in a one-
page chart. The chart the risk manager prepared is a
A) Risk report with warning color code
B) Risk matrix with value at risk
C) Risk register with scenario model
D) Risk map with simulation
Answer: Risk register with scenario model
●● William is a project manager for Parker International. He has been
assigned a key project with a short deadline. William realizes that this
project is going to require revising the job duties of some individuals
and a collaborative effort from of all team members. When revising job
duties, William should do which one of the following?
A) Try to enrich individuals' work rather than merely expand it
B) Rely on the most senior individuals to take on additional duties
, C) Overload some individuals with more work than others
D) Focus on the individuals' personalities rather than results
Answer: A) Try to enrich individuals' work rather than merely expand it
●● 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 product and decide whether
or not it is feasible. Which one of the following team approaches to risk
identification is Blithe using?
A) Delphi technique
B) SWOT analysis
C) Scenario analysis
D) HAZOP workshop
Answer: B) SWOT analysis
●● Risk management professionals can use risk mapping to identify
inherent risk and residual (current) level of risk. Inherent risk is
important because the difference between inherent and residual risk
provides a measure of
A) The necessity of risk financing
