ARM 400 exam (2026) (TESTING ACTUAL EXAM
QUESTIONS) AND VERIFIED ANSWERS
(MULTIPLE CHOICES) ||A+ GRADED |100%
CORRECT!
RM 400 Practice Test: 40 MCQs (with answers)
1)
Which statement best reflects a “risk in an evolving world” mindset?
A. Focus only on insurable hazards
B. Treat risk as isolated departmental issues
C. Consider interconnected, emerging, and data-driven risks
D. Avoid quantitative methods
Answer: C — Modern risk is interconnected and increasingly data-driven.
2)
Enterprise Risk Management (ERM) is best defined as:
A. Buying insurance for all risks
B. A siloed approach managed only by the risk department
C. A coordinated approach to manage risks across the organization to support objectives
D. A compliance-only framework
Answer: C — ERM aligns risk management with strategy and objectives.
3)
Which is an example of an emerging risk commonly emphasized in modern risk programs?
A. Routine office supplies theft
B. Cyber extortion and ransomware
C. Paper filing errors only
D. Seasonal demand variation only
Answer: B — Cyber threats are key emerging risks.
4)
Risk appetite describes:
A. The maximum insurance premium a company will pay
B. The amount and type of risk an organization is willing to accept to achieve objectives
,C. The number of risks identified in an audit
D. Only downside financial risk
Answer: B
5)
A Key Risk Indicator (KRI) is primarily used to:
A. Record past losses only
B. Provide early warning signals about changing risk levels
C. Replace internal audit testing
D. Guarantee compliance
Answer: B
6)
Which is the best example of risk correlation?
A. Two unrelated suppliers in different regions
B. Cyber incident increasing operational disruption and reputational harm
C. Inventory counts matching purchase orders
D. A single loss event with no follow-on effects
Answer: B
7)
Scenario analysis is most useful when:
A. Risks are stable and predictable
B. Evaluating low-impact routine tasks
C. Considering high-impact, uncertain events and “what-if” outcomes
D. Estimating depreciation
Answer: C
8)
A common pitfall of relying solely on historical loss data is:
A. It is always too expensive
B. It ignores tail risk and emerging risks not present in the past
C. It always overestimates risk
D. It cannot be stored digitally
Answer: B
9)
, The “risk owner” is typically:
A. The CEO only
B. The person accountable for managing a specific risk within their area
C. The external auditor
D. The insurer
Answer: B
10)
Which choice best describes operational resilience?
A. Eliminating all risk exposure
B. The ability to prevent all disruptions
C. The ability to prepare for, respond to, and recover from disruptions while maintaining critical
operations
D. Outsourcing all key functions
Answer: C
11)
In risk governance, the Board is primarily responsible for:
A. Daily transaction approvals
B. Setting risk appetite and oversight of risk management
C. Writing all policies personally
D. Performing control tests
Answer: B
12)
“Three lines” models typically distinguish:
A. Sales, marketing, and HR
B. IT, finance, and operations
C. Business/operations, risk/compliance support, and internal audit assurance
D. Vendors, customers, and regulators
Answer: C
13)
Internal audit’s primary value is to:
A. Own all risks
B. Provide independent assurance on governance, risk management, and controls
C. Sell insurance
QUESTIONS) AND VERIFIED ANSWERS
(MULTIPLE CHOICES) ||A+ GRADED |100%
CORRECT!
RM 400 Practice Test: 40 MCQs (with answers)
1)
Which statement best reflects a “risk in an evolving world” mindset?
A. Focus only on insurable hazards
B. Treat risk as isolated departmental issues
C. Consider interconnected, emerging, and data-driven risks
D. Avoid quantitative methods
Answer: C — Modern risk is interconnected and increasingly data-driven.
2)
Enterprise Risk Management (ERM) is best defined as:
A. Buying insurance for all risks
B. A siloed approach managed only by the risk department
C. A coordinated approach to manage risks across the organization to support objectives
D. A compliance-only framework
Answer: C — ERM aligns risk management with strategy and objectives.
3)
Which is an example of an emerging risk commonly emphasized in modern risk programs?
A. Routine office supplies theft
B. Cyber extortion and ransomware
C. Paper filing errors only
D. Seasonal demand variation only
Answer: B — Cyber threats are key emerging risks.
4)
Risk appetite describes:
A. The maximum insurance premium a company will pay
B. The amount and type of risk an organization is willing to accept to achieve objectives
,C. The number of risks identified in an audit
D. Only downside financial risk
Answer: B
5)
A Key Risk Indicator (KRI) is primarily used to:
A. Record past losses only
B. Provide early warning signals about changing risk levels
C. Replace internal audit testing
D. Guarantee compliance
Answer: B
6)
Which is the best example of risk correlation?
A. Two unrelated suppliers in different regions
B. Cyber incident increasing operational disruption and reputational harm
C. Inventory counts matching purchase orders
D. A single loss event with no follow-on effects
Answer: B
7)
Scenario analysis is most useful when:
A. Risks are stable and predictable
B. Evaluating low-impact routine tasks
C. Considering high-impact, uncertain events and “what-if” outcomes
D. Estimating depreciation
Answer: C
8)
A common pitfall of relying solely on historical loss data is:
A. It is always too expensive
B. It ignores tail risk and emerging risks not present in the past
C. It always overestimates risk
D. It cannot be stored digitally
Answer: B
9)
, The “risk owner” is typically:
A. The CEO only
B. The person accountable for managing a specific risk within their area
C. The external auditor
D. The insurer
Answer: B
10)
Which choice best describes operational resilience?
A. Eliminating all risk exposure
B. The ability to prevent all disruptions
C. The ability to prepare for, respond to, and recover from disruptions while maintaining critical
operations
D. Outsourcing all key functions
Answer: C
11)
In risk governance, the Board is primarily responsible for:
A. Daily transaction approvals
B. Setting risk appetite and oversight of risk management
C. Writing all policies personally
D. Performing control tests
Answer: B
12)
“Three lines” models typically distinguish:
A. Sales, marketing, and HR
B. IT, finance, and operations
C. Business/operations, risk/compliance support, and internal audit assurance
D. Vendors, customers, and regulators
Answer: C
13)
Internal audit’s primary value is to:
A. Own all risks
B. Provide independent assurance on governance, risk management, and controls
C. Sell insurance
