ARM 400 ACTUAL FINALS QUESTIONS AND
ANSWERS SET A+
✔✔Key risk indicator (KRI) - ✔✔A tool used by an organization to measure the
uncertainty of reaching a goal. Help gauges the results of activates critical to the
success of an organization
✔✔Risk appetite - ✔✔Amount of risk an organization is willing to take on in order to
achieve an anticipated result or return.
✔✔Risk criteria - ✔✔Information used as a basis for measuring the significance of a
risk.
✔✔Economic capital - ✔✔The amount of capital required by an organization to ensure
solvency at a given probability level, such as 99 percent, based on the fair value of its
assets minus the fair value of its liabilities.
✔✔Business process management (BPM) - ✔✔A systematic, iterative plan to analyze
and improve business processes through life-cycle phases to achieve long-term goals
and client satisfaction.
✔✔Risk indicator - ✔✔Risk indicator
✔✔Types of KPIs - ✔✔Financial, Staffing & Operational
✔✔Use of KRI - ✔✔track, plan for and respond to risk.
✔✔KPIs are __________ in nature - ✔✔lagging
✔✔KRIs are __________ in nature - ✔✔leading / predictive
✔✔internal KRI - ✔✔budget changes, collection delays, EE turnover, system outages.
,✔✔External KRI - ✔✔cost of raw materials, availability of lab, changing industry
regulations
✔✔Sources of KRIs - ✔✔Corporate strategies/ objectives/ policies (internally and
legally), loss experience, stakeholders requirements, internal and external SMEs
✔✔Characteristics of KRIs - ✔✔Supportive of organizational goals, quantifiable,
supportive of management, measured acutely, can be benchmarked, reviewed regularly
and predictive of future events
✔✔Business process management (BPM) life cycle - ✔✔design/redesign processes,
model scenarios, execute process changes, monitor results, and optimize processes
✔✔Goal of BPM - ✔✔increased efficiency, managing risk, increasing profitability
throughout life cycles of continual measurement and feedback
✔✔business process automation (BPA) - ✔✔automation of complex processes through
technology
✔✔Robotic Process Automation (RPA) - ✔✔Process involving the use of software
robots (bots) to input and analyze data the same way humans would, only faster.
✔✔risk exposures created by both BPA and RPA - ✔✔Tedious integration, upfront
costs, low morale, glitches, overreliance & degraded customer experience
✔✔main characteristic of effective key risk indicators - ✔✔They are based on
quantifiable information
✔✔Which leve of an organization usually has the most detailed KRIs? - ✔✔Department
level
✔✔External Environment Risk - ✔✔Physical, Social, Legal and Economic
✔✔Internal Environment Risk - ✔✔Product, operation, cognitive, tech/ information
systems
✔✔key element of an organization's internal environment - ✔✔risk tolerance and
appetite of its decision makers
✔✔Internal Key Stakeholders - ✔✔C- level officers, front- line manager, sales with
important accounts & laborers with niche skills
✔✔External Key Stakeholders - ✔✔suppliers, consumers, govt. or trade associations
, ✔✔Who is best to manage minor risks within the organization - ✔✔risk center
✔✔Who is best to manage significant risks within the organization - ✔✔corporate level'
✔✔responsibilities of risk owners - ✔✔identifying and assessing the risks, threats and
opportunities from the risk
✔✔Who should be the risk owners - ✔✔the person who is most affected by or creates
the risk
✔✔Delegating - Management Style - ✔✔management provides broad, strategic
direction, but lets stakeholders create their own method of attaining goals
✔✔Directive - Management Style - ✔✔Manages make most decisions and tell other
exactly what to do to achieve goals. Management limits the flow of information in the
interest of efficiency
✔✔Supportive - Management Style - ✔✔Management explains the rationale for goals
and decisions and encourages stakeholders to pursue related endeavors. Management
is open to feedback from others, and stakeholders may establish their own
communication networks.
✔✔Effective Risk Management Communication - ✔✔conveys a message clearly and
accurately to specific audiences.. Identifies audience level of understanding of the
concepts being communication and crafts the message to that level of understanding
✔✔Informal internal Communication Channels - ✔✔y skipping levels of management
when the message doesn't apply to them. However, the contents of a message
communicated through an informal channel need to be verified, as the message may
have skipped certain quality control stages in the communication process
✔✔Formal internal Communication Channel - ✔✔Formal channels usually follow the
organization's supervisory structure
✔✔Formal internal Communication Channel Advantages/ Disadvantages -
✔✔Advantages: everyone knows to whom they report, but in some cases, that can
become a disadvantage. If employees don't have direct access to everyone in the
organization, messages could be delayed or become distorted as they pass through the
communication lines.
✔✔Efficient External Communication - ✔✔To communicate efficiently with external
stakeholders, an organization must establish well-defined external communication
channels and procedures. The organization should have standard operating procedures
ANSWERS SET A+
✔✔Key risk indicator (KRI) - ✔✔A tool used by an organization to measure the
uncertainty of reaching a goal. Help gauges the results of activates critical to the
success of an organization
✔✔Risk appetite - ✔✔Amount of risk an organization is willing to take on in order to
achieve an anticipated result or return.
✔✔Risk criteria - ✔✔Information used as a basis for measuring the significance of a
risk.
✔✔Economic capital - ✔✔The amount of capital required by an organization to ensure
solvency at a given probability level, such as 99 percent, based on the fair value of its
assets minus the fair value of its liabilities.
✔✔Business process management (BPM) - ✔✔A systematic, iterative plan to analyze
and improve business processes through life-cycle phases to achieve long-term goals
and client satisfaction.
✔✔Risk indicator - ✔✔Risk indicator
✔✔Types of KPIs - ✔✔Financial, Staffing & Operational
✔✔Use of KRI - ✔✔track, plan for and respond to risk.
✔✔KPIs are __________ in nature - ✔✔lagging
✔✔KRIs are __________ in nature - ✔✔leading / predictive
✔✔internal KRI - ✔✔budget changes, collection delays, EE turnover, system outages.
,✔✔External KRI - ✔✔cost of raw materials, availability of lab, changing industry
regulations
✔✔Sources of KRIs - ✔✔Corporate strategies/ objectives/ policies (internally and
legally), loss experience, stakeholders requirements, internal and external SMEs
✔✔Characteristics of KRIs - ✔✔Supportive of organizational goals, quantifiable,
supportive of management, measured acutely, can be benchmarked, reviewed regularly
and predictive of future events
✔✔Business process management (BPM) life cycle - ✔✔design/redesign processes,
model scenarios, execute process changes, monitor results, and optimize processes
✔✔Goal of BPM - ✔✔increased efficiency, managing risk, increasing profitability
throughout life cycles of continual measurement and feedback
✔✔business process automation (BPA) - ✔✔automation of complex processes through
technology
✔✔Robotic Process Automation (RPA) - ✔✔Process involving the use of software
robots (bots) to input and analyze data the same way humans would, only faster.
✔✔risk exposures created by both BPA and RPA - ✔✔Tedious integration, upfront
costs, low morale, glitches, overreliance & degraded customer experience
✔✔main characteristic of effective key risk indicators - ✔✔They are based on
quantifiable information
✔✔Which leve of an organization usually has the most detailed KRIs? - ✔✔Department
level
✔✔External Environment Risk - ✔✔Physical, Social, Legal and Economic
✔✔Internal Environment Risk - ✔✔Product, operation, cognitive, tech/ information
systems
✔✔key element of an organization's internal environment - ✔✔risk tolerance and
appetite of its decision makers
✔✔Internal Key Stakeholders - ✔✔C- level officers, front- line manager, sales with
important accounts & laborers with niche skills
✔✔External Key Stakeholders - ✔✔suppliers, consumers, govt. or trade associations
, ✔✔Who is best to manage minor risks within the organization - ✔✔risk center
✔✔Who is best to manage significant risks within the organization - ✔✔corporate level'
✔✔responsibilities of risk owners - ✔✔identifying and assessing the risks, threats and
opportunities from the risk
✔✔Who should be the risk owners - ✔✔the person who is most affected by or creates
the risk
✔✔Delegating - Management Style - ✔✔management provides broad, strategic
direction, but lets stakeholders create their own method of attaining goals
✔✔Directive - Management Style - ✔✔Manages make most decisions and tell other
exactly what to do to achieve goals. Management limits the flow of information in the
interest of efficiency
✔✔Supportive - Management Style - ✔✔Management explains the rationale for goals
and decisions and encourages stakeholders to pursue related endeavors. Management
is open to feedback from others, and stakeholders may establish their own
communication networks.
✔✔Effective Risk Management Communication - ✔✔conveys a message clearly and
accurately to specific audiences.. Identifies audience level of understanding of the
concepts being communication and crafts the message to that level of understanding
✔✔Informal internal Communication Channels - ✔✔y skipping levels of management
when the message doesn't apply to them. However, the contents of a message
communicated through an informal channel need to be verified, as the message may
have skipped certain quality control stages in the communication process
✔✔Formal internal Communication Channel - ✔✔Formal channels usually follow the
organization's supervisory structure
✔✔Formal internal Communication Channel Advantages/ Disadvantages -
✔✔Advantages: everyone knows to whom they report, but in some cases, that can
become a disadvantage. If employees don't have direct access to everyone in the
organization, messages could be delayed or become distorted as they pass through the
communication lines.
✔✔Efficient External Communication - ✔✔To communicate efficiently with external
stakeholders, an organization must establish well-defined external communication
channels and procedures. The organization should have standard operating procedures
