ARM 400 ACTUAL QUESTIONS WITH VERIFIED
SOLUTIONS
◉ Objective Risk.
Answer: The measurable variation in uncertain outcomes based on
facts and data
◉ Diversifiable Risk.
Answer: A risk that affects only some individuals, businesses or
small groups
◉ Systemic Risk.
Answer: The potential for a major disruption in the function of an
entire market or financial system
◉ Market Risk.
Answer: Uncertainty about an investment's future value because of
potential chances in the market for that type of investment
◉ Liquidity Risk.
Answer: The risk that an asset cannot be sold on short notice
without incurring a loss
,◉ Process for Managing Risk (5 steps).
Answer: 1. Scan Environment
2. identify Risk
3. Analyze Risk
4. Treat Risks
5. Monitor & Review
◉ Risk Management Framework.
Answer: A foundation for applying the risk management process
throughout the organization.
◉ Risk Criteria.
Answer: Information used as a basis for measuring the significance
of a risk
◉ Major options to treat risk (5).
Answer: 1. Avoid the risk
2. Modify the likelihood and/ or impact of the risk
3. Transfer the risk
4. Retain the risk
5. Exploit the risk
,◉ Factors to consider when defining a companies risk criteria (6).
Answer: 1. Causes of risk
2. Effects of risk
3. Metrics used to measure effects of risk
4. Timeframe of potential effects
5. Methods to determine level of risk
6. Approach to combinations of risk
◉ Process of risk identification of several keys risks within an
organization.
Answer: Communication between departmental stakeholder
(understand their perspective of most pressing risks they face),
external experts (shine light on emerging risks not anticipated or
known about) & Collaborating with senior management (ensure risk
associated with the organization's strategy are identified)
◉ Risk analysis.
Answer: Applying the defined risk criteria to determine the source,
cause, likelihood, and potential consequences of each of the
identified risks. Depending on the circumstances, this analysis can
be quantitative, qualitative, or both. Quantitative analysis, in
particular, may entail interacting with experts.
, ◉ 4 results of effective workplace communication.
Answer: 1. increases productivity
2. reduces confusion
3. Mitigates conflict
4. improves morale
◉ 5 steps of the communication process.
Answer: 1. Clear communication objectives
2. Analyze audience
3. Decide when and where to talk
4. Pay attention to your body language
5. Ask for feedback to ensure it was understood
◉ 3 elements of active listening.
Answer: Attention, suspension of judgement and response
◉ nondirective techniques of communication.
Answer: don't direct the flow of the conservation
◉ Types of nondirective communication.
Answer: open ended questions, asking for clarification, reflecting on
the input of others and empathizing
SOLUTIONS
◉ Objective Risk.
Answer: The measurable variation in uncertain outcomes based on
facts and data
◉ Diversifiable Risk.
Answer: A risk that affects only some individuals, businesses or
small groups
◉ Systemic Risk.
Answer: The potential for a major disruption in the function of an
entire market or financial system
◉ Market Risk.
Answer: Uncertainty about an investment's future value because of
potential chances in the market for that type of investment
◉ Liquidity Risk.
Answer: The risk that an asset cannot be sold on short notice
without incurring a loss
,◉ Process for Managing Risk (5 steps).
Answer: 1. Scan Environment
2. identify Risk
3. Analyze Risk
4. Treat Risks
5. Monitor & Review
◉ Risk Management Framework.
Answer: A foundation for applying the risk management process
throughout the organization.
◉ Risk Criteria.
Answer: Information used as a basis for measuring the significance
of a risk
◉ Major options to treat risk (5).
Answer: 1. Avoid the risk
2. Modify the likelihood and/ or impact of the risk
3. Transfer the risk
4. Retain the risk
5. Exploit the risk
,◉ Factors to consider when defining a companies risk criteria (6).
Answer: 1. Causes of risk
2. Effects of risk
3. Metrics used to measure effects of risk
4. Timeframe of potential effects
5. Methods to determine level of risk
6. Approach to combinations of risk
◉ Process of risk identification of several keys risks within an
organization.
Answer: Communication between departmental stakeholder
(understand their perspective of most pressing risks they face),
external experts (shine light on emerging risks not anticipated or
known about) & Collaborating with senior management (ensure risk
associated with the organization's strategy are identified)
◉ Risk analysis.
Answer: Applying the defined risk criteria to determine the source,
cause, likelihood, and potential consequences of each of the
identified risks. Depending on the circumstances, this analysis can
be quantitative, qualitative, or both. Quantitative analysis, in
particular, may entail interacting with experts.
, ◉ 4 results of effective workplace communication.
Answer: 1. increases productivity
2. reduces confusion
3. Mitigates conflict
4. improves morale
◉ 5 steps of the communication process.
Answer: 1. Clear communication objectives
2. Analyze audience
3. Decide when and where to talk
4. Pay attention to your body language
5. Ask for feedback to ensure it was understood
◉ 3 elements of active listening.
Answer: Attention, suspension of judgement and response
◉ nondirective techniques of communication.
Answer: don't direct the flow of the conservation
◉ Types of nondirective communication.
Answer: open ended questions, asking for clarification, reflecting on
the input of others and empathizing
