ARM 400 Exam Questions and Answers
100% Verified Graded A+
1. 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. Seek feedback from stakeholders
B. Stay focused on the organization's objectives
C. Define the organization's risk appetite
D. Enhance stakeholders' confidence in the process
Answer: D
2. Which of the following risk management program goals is an essential goal
for all public entities?
A. Earning stability
B. Continuity of operations
,C. Growth
D. Survival
Answer: B
3. The traditional definition of risk management reflects the traditional con-
cept of risk as
A. Both positive and negative.
B. Negative.
C. Uncontrollable.
D. Strategic.
Answer: B
4. During the past year, International Toys has undertaken four capital pro-
jects. The company has renovated and refurbished one of its aging warehouse
buildings. It has purchased the most recent version of its current order pro-
cessing computer software. It has added two trucks to its fleet of delivery
vehicles. Lastly, it has purchased a new production machine that will allow it
to launch a new product line. Which one of the following company projects is
the most speculative risk?
A. The two new trucks
,B. The warehouse refurbishment
C. The software upgrade
D. The new production machine
Answer: D
5. Which one of the following statements is true regarding the basic measures
that apply to risk management?
A. Consequences measure the degree to which an occurrence could positively
or negatively affect an organization.
B. Hedging is a risk management strategy that can reduce the risk of correla-
tion.
C. Risk increases as volatility decreases.
D. Longer time horizons are generally less risky that shorter ones.
Answer: A
6. Which one of the following provides a measure of the maximum potential
damage associated with an occurrence?
A. Exposure
B. Duration
C. Underwriting risk
, D. Maximum probable loss
Answer: A
7. Samuel was recently hired as a risk management professional for Parker
Property Management. He has been asked by senior management to review
the organization's current insurance policies to make sure that the organiza-
tion is adequately protected, and also see if there are any opportunities to
save on the premiums. Samuel must do which one of the following through
internal communication before he will be able to complete this task?
A. Determine the organization's risk appetite
B. Identify all of the risks that the organization faces
C. Earn the confidence of the organization's board of directors
D. Become familiar with industry regulations
Answer: A
8. Catastrophes such as recent earthquakes and the 2011 tsunami in Japan
pointed out a need for many organizations to evaluate and manage their
A. Supply-chain risk.
B. Derivative risk.
C. Compliance risk.
100% Verified Graded A+
1. 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. Seek feedback from stakeholders
B. Stay focused on the organization's objectives
C. Define the organization's risk appetite
D. Enhance stakeholders' confidence in the process
Answer: D
2. Which of the following risk management program goals is an essential goal
for all public entities?
A. Earning stability
B. Continuity of operations
,C. Growth
D. Survival
Answer: B
3. The traditional definition of risk management reflects the traditional con-
cept of risk as
A. Both positive and negative.
B. Negative.
C. Uncontrollable.
D. Strategic.
Answer: B
4. During the past year, International Toys has undertaken four capital pro-
jects. The company has renovated and refurbished one of its aging warehouse
buildings. It has purchased the most recent version of its current order pro-
cessing computer software. It has added two trucks to its fleet of delivery
vehicles. Lastly, it has purchased a new production machine that will allow it
to launch a new product line. Which one of the following company projects is
the most speculative risk?
A. The two new trucks
,B. The warehouse refurbishment
C. The software upgrade
D. The new production machine
Answer: D
5. Which one of the following statements is true regarding the basic measures
that apply to risk management?
A. Consequences measure the degree to which an occurrence could positively
or negatively affect an organization.
B. Hedging is a risk management strategy that can reduce the risk of correla-
tion.
C. Risk increases as volatility decreases.
D. Longer time horizons are generally less risky that shorter ones.
Answer: A
6. Which one of the following provides a measure of the maximum potential
damage associated with an occurrence?
A. Exposure
B. Duration
C. Underwriting risk
, D. Maximum probable loss
Answer: A
7. Samuel was recently hired as a risk management professional for Parker
Property Management. He has been asked by senior management to review
the organization's current insurance policies to make sure that the organiza-
tion is adequately protected, and also see if there are any opportunities to
save on the premiums. Samuel must do which one of the following through
internal communication before he will be able to complete this task?
A. Determine the organization's risk appetite
B. Identify all of the risks that the organization faces
C. Earn the confidence of the organization's board of directors
D. Become familiar with industry regulations
Answer: A
8. Catastrophes such as recent earthquakes and the 2011 tsunami in Japan
pointed out a need for many organizations to evaluate and manage their
A. Supply-chain risk.
B. Derivative risk.
C. Compliance risk.
