ARM 401 Exam Practice Complete Questions And Answers(Rated 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