ARM 401 Exam Practice 2023 Graded A+

A risk map showing a large difference between inherent and residual risk indicates which one of the following? A. The risk is within the organization's risk appetite B. The current risk treatment is ineffective C. The current risk treatment is effective D. The risk does not need to be treated - ANSWER-C Lucas, a risk professional for Jones Incorporated, recently met with experts from the utility industry to discuss the potential loss of supply and risks to the infrastructure. Lucas must now decide which risks, and proposed treatments, need to be communicated to the board of Jones Incorporated. Lucas should make this decision based on A. The supply source involved. B. The organization's risk appetite and tolerance levels. C. Whether the risk in natural or man-made. D. Whether any government regulations are involved or not. - ANSWER-B SoCal Movie Company produces movies at a studio in Southern California. The risk manager decided to identify the range of potential consequences associated with various risks that the company faces. For example, if a severe earthquake occurred while the company was filming a movie, there could be deaths and injuries, destruction of movie sets, delays in production, costs associated with filming at an alternative location, and loss of reputation and good will. The type of analysis performed by the risk manager is called A. SWOT analysis. B. Scenario analysis. C. Sensitivity analysis. D. HAZOP analysis. - ANSWER-B Insurance Company (IC) sells its coverages through independent insurance agents. Independent agents represent several insurance companies. Tom, the president of IC, has learned that the independent agent who is the highest producer for IC is considering selling his agency. IC is considering acquiring the agency since Tom is concerned that if the agency is sold, IC may lose a substantial amount of business. Tom asked IC's risk manager to analyze the prospective purchase. The analysis revealed that the acquisition would likely secure most of IC's book of business with the agency but also revealed local competitors that would try to place the business as well. In addition, the analysis revealed the opportunity for IC to move some accounts currently placed with other insurers over to IC. Also, it was learned that a competitor expressed an interest in the agency acquisition. The analysis performed by the risk manager is a form of A. Decision tree analysis. B. HAZOP analysis. C. Risk map analysis. D. SWOT analysis. - ANSWER-D Murray Trucking is interested in evaluating which risk factors are most likely to lead to the most costly accidents. They are evaluating risk factors such as speed, weather conditions, driver experience, distance traveled, and gross vehicle weight. Which one of the following statistical measurements would be useful for the risk manager when calculating the probability of the different risk factors causing severe accidents? A. Telematics B. Inverse covariance C. Variance D. Monte Carlo simulation - ANSWER-C Blithe Manufacturing has experienced a drop in market share. The marketing department has come up with a way to differentiate their product in order to regain market share. Blithe has assembled a team of individuals representing different organizational functions to analyze both internal and external factors of the new product and decide whether or not it is feasible. Which one of the following team approaches to risk identification is Blithe using? A. Delphi technique B. HAZOP workshop C. SWOT analysis D. Scenario analysis - ANSWER-C William is a project manager for Parker International. He has been assigned a key project with a short deadline. William realizes that this project is going to require revising the job duties of some individuals and a collaborative effort from of all team members. When revising job duties, William should do which one of the following? A. Overload some individuals with more work than others B. Try to enrich individuals' work rather than merely expand it C. Rely on the most senior individuals to take on additional duties D. Focus on the individuals' personality rather than results - ANSWER-B Shelton Manufacturing executives are growing increasingly concerned about wildfires and the potential effects on supply chain management. As the risk professional, Carla has been asked to meet with experts on the subject and report back to the executive team. Which one of the following should Carla do before meeting with external wildfire experts? A. Carla should speak with internal subject-matter experts in hopes that she can avoid needing the external wildfire experts. B. Carla should research the field and get a working understanding of wildfires. C. Carla should solicit questions from internal experts and submit them to the external wildfire experts. D. Carla should try to learn as much as possible about wildfires, so she can impress the wildfire experts. - ANSWER-B An organization practicing holistic risk management would assess the cost of raw materials and foreign exchange risk under which one of the following quadrants of risk? A. Strategic risk B. Financial risk C. Operational risk D. Hazard risk - ANSWER-B Risk maps differ from other risk assessment tools and techniques in which one of the following ways? A. Risk maps dissect processes within the organization from input to output for the purpose of improving them. B. Risk maps identify, prioritize, and quantify risks in a two-dimensional pictorial that illustrates frequency and severity on vertical and horizontal axes. C. Risk maps have the potential to identify both negative risks and opportunity risks. D. Risk maps are able to quickly explore a vast number of possible outcomes based on large datasets. - ANSWER-B As a best practice, a risk register should be an interactive computer system. Which one of the following individuals should be responsible for continually updating risk information? A. Customer B. Risk management professional C. Risk owner D. Chief executive officer - ANSWER-C A tool developed at the risk owner level that links specific activities, processes, projects, or plans to a list of identified risks and results of risk analysis and evaluation; and that is ultimately consolidated at the enterprise level is called a A. Risk report. B. Risk map. C. Risk matrix. D. Risk register. - ANSWER-D Which one of the following risk assessment tools has the potential to identify both negative risks and opportunity risks? A. Risk maps B. Audits C. Cause and effect analysis D. Failure mode and effects analysis - ANSWER-B Emma is a risk management professional at a chemical engineering organization. A new process is being designed and Emma has been told that all risks must be identified and eliminated during the design stage. Emma is a risk management professional, but not a chemical engineering expert. She has assembled a team of engineering experts and stakeholders to identify the risk associated with the process by subdividing the process into components and reviewing each component and then recommend