ARM 400 UPDATED EVALUATION EXAM
QUESTIONS AND ANSWERS SURE A+
✔✔BD Company has made widgets for over 79 years using the same production
techniques for fear of the huge costs from potential consumer lawsuits if production is
changed and product quality suffers. With respect to its risk attitude, this organization
would be classified as
A. Risk seeking.
B. Risk naïve.
C. Risk avoiding.
D. Risk optimizing. - ✔✔C
✔✔The service representatives for Tauton Insurance will be eligible for a bonus only if
the customer retention rate is increased by 5%. This is an example of which one of the
following standards?
A. A critical success factor derived from a strategic objective
B. A severe risk tolerance level
C. A key performance indicator based on financial ratios
D. A corrective measure linked with an identified tolerance level - ✔✔D
✔✔Key risk indicators (KRIs) help organizations identify issues that can lead to losses.
Effective KRIs are based on a company's
A. Organizational structure.
,B. Product or industry.
C. Strategic objectives.
D. Sales volume. - ✔✔C
✔✔An organization's goals and objectives are met by establishing and attaining
measurable standards for the many activities it pursues. Which one of the following
statements is correct with respect to those standards?
A. A key performance indicator (KPI) answers the question, "What will make our
organization a success?"
B. Generally, an organization's risk tolerance has little impact on its critical success
factors (CSFs) and key performance indicators (KPIs).
C. Organizations with key performance - ✔✔D
✔✔Organizations use key risk indicators (KRIs) to plan for and respond to risk. Which
one of the following statements is correct with respect to KRIs?
A. A KRI can reveal an upward trend in the level of a risk that, if it continues, will exceed
the designated risk threshold for that risk.
B. KRIs are effective internal indicators of changes such as budget variances; however
they are not effective external indicators.
C. An organization's risk criteria, predefined tolerance ranges that measure vari - ✔✔A
✔✔Organizations use key risk indicators (KRIs) to plan for and respond to
A. Failure.
B. Risk.
C. Questions.
D. Emergencies. - ✔✔B
✔✔Which one of the following statements is true regarding the business process
management (BPM) life cycle model?
A. The model is driven by the collaboration of human and technological input.
B. The model is designed to review one business process at a time.
C. The model is primarily used by organizations in the manufacturing sector.
D. The model is ineffective unless all five steps are completed on a continuous basis. -
✔✔A
✔✔Carbon Manufacturing Company just hired a new chief risk officer (CRO) and one of
his first tasks was to recommend updated key risk indicators (KRIs) to the chief
executive officer (CEO). The CEO was especially interested in KRIs measuring the
company's profitability. One area of measurement that the new CRO might want to use
is
A. Personnel changes.
B. Customer invoices.
C. Customer orders.
D. Aged accounts receivable. - ✔✔D
,✔✔The business process management (BPM) life cycle incorporates five steps. Which
one of the following best describes the first step in the BPM process?
A. Critical processes that support achievement of the organization's goals are selected
for analysis.
B. Processes are modeled to identify the organization's response to what-if scenarios.
C. Processes are designed or redesigned by considering workflows and affected
personnel.
D. Processes are tracked so that statistics on their performance can be - ✔✔C
✔✔For an organization, a key performance indicator (KPI) measures the performance
of a specific activity at a predetermined level or amount. Which one of the following is
an example of a KPI based on a ratio?
A. Customer-focused website
B. High employee morale
C. Safe transport of customer goods
D. Inventory turnover - ✔✔D
✔✔North American Furnishings is using business process management to help it
identify risks that threaten its processes. Which one of the following risks would be
considered an internal risk?
A. The loss of available materials due to tornadoes
B. The loss of skilled craftspeople due to retirement
C. The drop in demand due to rising interest rates
D. The rise in the cost of materials due to new forestry regulations - ✔✔B
✔✔Which one of the following is an example of an internal key risk indicator (KRI) that a
contractor might monitor?
A. Cost of lumber
B. Interest rates
C. Availability of skilled labor
D. Budget variances - ✔✔D
✔✔One of the strategic objectives for Cromley Insurance Group is customer
satisfaction. Which one of the following is a critical success factor (CSF) that would help
refine this strategic objective?
A. High profitability
B. Increase retention ratio by 5%
C. Reduce claim activity by 4 to 6%
D. High customer retention - ✔✔D
✔✔Which one of the following answers the question, "What shows we are a success?"
A. Risk tolerance level
B. Strategic objective
C. Critical success factor
D. Key performance indicator - ✔✔D
, ✔✔Successful organizations have goals and objectives. A financial or nonfinancial
measurement that defines how successfully an organization is progressing toward its
long-term goals is referred to as
A. An objective gauge (OG).
B. A critical success factor (CSF).
C. A key performance indicator (KPI).
D. An operating standard (OS). - ✔✔C
✔✔An organization has established a key performance indicator to "reduce employee
injuries by 6%." Which one of the following would indicate a low risk tolerance for this
KPI?
A. Reduce employee injuries by 2%
B. Reduce employee injuries by 4%
C. Reduce employee injuries by 5 to 6%
D. Employee injury rate remains unchanged - ✔✔C
✔✔Which one of the following is a main characteristic of effective key risk indicators
(KRIs)?
A. They define the boundaries of risk tolerance.
B. They are lagging in nature.
C. They are based on quantifiable information.
D. They measure progress toward achieving objectives. - ✔✔C
✔✔One of the strategic objectives for Cromley Insurance Group is customer
satisfaction. Which one of the following is a critical success factor (CSF) that would help
refine this strategic objective?
A. High customer retention
B. Reduce claim activity by 4 to 6%
C. Increase retention ratio by 5%
D. High profitability - ✔✔A
✔✔Which one of the following terms refers to information used as a basis for measuring
the significance of a risk?
A. Risk criteria
B. Risk tolerance
C. Risk appetite
D. Risk threshold - ✔✔A
✔✔Which one of the following is an example of an external key risk indicator (KRI) that
a manufacturer might monitor?
A. Amount of budget variances
B. Number of employee injuries
C. Age of accounts payable
D. Cost of raw materials - ✔✔D
QUESTIONS AND ANSWERS SURE A+
✔✔BD Company has made widgets for over 79 years using the same production
techniques for fear of the huge costs from potential consumer lawsuits if production is
changed and product quality suffers. With respect to its risk attitude, this organization
would be classified as
A. Risk seeking.
B. Risk naïve.
C. Risk avoiding.
D. Risk optimizing. - ✔✔C
✔✔The service representatives for Tauton Insurance will be eligible for a bonus only if
the customer retention rate is increased by 5%. This is an example of which one of the
following standards?
A. A critical success factor derived from a strategic objective
B. A severe risk tolerance level
C. A key performance indicator based on financial ratios
D. A corrective measure linked with an identified tolerance level - ✔✔D
✔✔Key risk indicators (KRIs) help organizations identify issues that can lead to losses.
Effective KRIs are based on a company's
A. Organizational structure.
,B. Product or industry.
C. Strategic objectives.
D. Sales volume. - ✔✔C
✔✔An organization's goals and objectives are met by establishing and attaining
measurable standards for the many activities it pursues. Which one of the following
statements is correct with respect to those standards?
A. A key performance indicator (KPI) answers the question, "What will make our
organization a success?"
B. Generally, an organization's risk tolerance has little impact on its critical success
factors (CSFs) and key performance indicators (KPIs).
C. Organizations with key performance - ✔✔D
✔✔Organizations use key risk indicators (KRIs) to plan for and respond to risk. Which
one of the following statements is correct with respect to KRIs?
A. A KRI can reveal an upward trend in the level of a risk that, if it continues, will exceed
the designated risk threshold for that risk.
B. KRIs are effective internal indicators of changes such as budget variances; however
they are not effective external indicators.
C. An organization's risk criteria, predefined tolerance ranges that measure vari - ✔✔A
✔✔Organizations use key risk indicators (KRIs) to plan for and respond to
A. Failure.
B. Risk.
C. Questions.
D. Emergencies. - ✔✔B
✔✔Which one of the following statements is true regarding the business process
management (BPM) life cycle model?
A. The model is driven by the collaboration of human and technological input.
B. The model is designed to review one business process at a time.
C. The model is primarily used by organizations in the manufacturing sector.
D. The model is ineffective unless all five steps are completed on a continuous basis. -
✔✔A
✔✔Carbon Manufacturing Company just hired a new chief risk officer (CRO) and one of
his first tasks was to recommend updated key risk indicators (KRIs) to the chief
executive officer (CEO). The CEO was especially interested in KRIs measuring the
company's profitability. One area of measurement that the new CRO might want to use
is
A. Personnel changes.
B. Customer invoices.
C. Customer orders.
D. Aged accounts receivable. - ✔✔D
,✔✔The business process management (BPM) life cycle incorporates five steps. Which
one of the following best describes the first step in the BPM process?
A. Critical processes that support achievement of the organization's goals are selected
for analysis.
B. Processes are modeled to identify the organization's response to what-if scenarios.
C. Processes are designed or redesigned by considering workflows and affected
personnel.
D. Processes are tracked so that statistics on their performance can be - ✔✔C
✔✔For an organization, a key performance indicator (KPI) measures the performance
of a specific activity at a predetermined level or amount. Which one of the following is
an example of a KPI based on a ratio?
A. Customer-focused website
B. High employee morale
C. Safe transport of customer goods
D. Inventory turnover - ✔✔D
✔✔North American Furnishings is using business process management to help it
identify risks that threaten its processes. Which one of the following risks would be
considered an internal risk?
A. The loss of available materials due to tornadoes
B. The loss of skilled craftspeople due to retirement
C. The drop in demand due to rising interest rates
D. The rise in the cost of materials due to new forestry regulations - ✔✔B
✔✔Which one of the following is an example of an internal key risk indicator (KRI) that a
contractor might monitor?
A. Cost of lumber
B. Interest rates
C. Availability of skilled labor
D. Budget variances - ✔✔D
✔✔One of the strategic objectives for Cromley Insurance Group is customer
satisfaction. Which one of the following is a critical success factor (CSF) that would help
refine this strategic objective?
A. High profitability
B. Increase retention ratio by 5%
C. Reduce claim activity by 4 to 6%
D. High customer retention - ✔✔D
✔✔Which one of the following answers the question, "What shows we are a success?"
A. Risk tolerance level
B. Strategic objective
C. Critical success factor
D. Key performance indicator - ✔✔D
, ✔✔Successful organizations have goals and objectives. A financial or nonfinancial
measurement that defines how successfully an organization is progressing toward its
long-term goals is referred to as
A. An objective gauge (OG).
B. A critical success factor (CSF).
C. A key performance indicator (KPI).
D. An operating standard (OS). - ✔✔C
✔✔An organization has established a key performance indicator to "reduce employee
injuries by 6%." Which one of the following would indicate a low risk tolerance for this
KPI?
A. Reduce employee injuries by 2%
B. Reduce employee injuries by 4%
C. Reduce employee injuries by 5 to 6%
D. Employee injury rate remains unchanged - ✔✔C
✔✔Which one of the following is a main characteristic of effective key risk indicators
(KRIs)?
A. They define the boundaries of risk tolerance.
B. They are lagging in nature.
C. They are based on quantifiable information.
D. They measure progress toward achieving objectives. - ✔✔C
✔✔One of the strategic objectives for Cromley Insurance Group is customer
satisfaction. Which one of the following is a critical success factor (CSF) that would help
refine this strategic objective?
A. High customer retention
B. Reduce claim activity by 4 to 6%
C. Increase retention ratio by 5%
D. High profitability - ✔✔A
✔✔Which one of the following terms refers to information used as a basis for measuring
the significance of a risk?
A. Risk criteria
B. Risk tolerance
C. Risk appetite
D. Risk threshold - ✔✔A
✔✔Which one of the following is an example of an external key risk indicator (KRI) that
a manufacturer might monitor?
A. Amount of budget variances
B. Number of employee injuries
C. Age of accounts payable
D. Cost of raw materials - ✔✔D
