ARM 54 Practice Exam Questions & Answers | 100% Correct | Verified

Risks from accidental loss, including the possibility of loss or no loss defines - Hazard risk The traditional definition of risk management reflects the traditional concept of risk as - Negative Which one of the following statements is true regarding the evolution of risk and risk management? - The definition of risk has evolved to include positive as well as negative attributes The Dodd-Frank Act, Solvency II, and Basel III all have the purpose of reducing - Systemic risk Which one of the following is a common risk management benefit the entire economy would realize as a consequence of a risk management program? - Reduced waste of resources-Risk management reduces waste of resources. Allocating resources for potential losses is a cost because the resources cannot be used for other purposes that could promote growth. To an insured organization, which one of the following is an example of a cost of risk associated with an asset or activity? - Cost of sprinkler systems One benefit of risk management to the economy is the reduction of the potential for a major disruption in the functioning of financial markets and the financial system. This risk that is reduced is called - Systemic risk Which one of the following risk management program goals enhances an organization's reputation? - Social responsibility-Social responsibility is the risk management program goal that will most likely enhance an organization's reputation. An organization must meet the standard of care that it owes to others in order to ensure that - Legal obligations are satisfied-An organization must meet the standard of care that it owes to others in order to ensure that legal obligations are satisfied. Risk management programs should - Operate economically and efficiently Which one of the following is essential to an effective risk management program? - Support of the organization's senior management-Support of the organization's senior management is essential to an effective risk management program. Which one of the following provides a measure of the maximum potential damage associated with an occurrence? - Exposure In an effort to grow its personal lines book, an insurer decides to offer discounts on homeowners and personal auto insurance to the employees of its largest business lines account. Which one of the following risk measures is most likely to increase as a result of this marketing decision? - Correlation-The insurer's risk correlation will most likely increase as a result of this marketing decision. According to the law of large numbers, as the number of exposure units insured increases, - The relative accuracy of predictions about future losses increases- According to the law of large numbers, as the number of exposure units insured increases, the relative accuracy of predictions about future losses increases.