ARM 400 Exam Questions & Answers 100% Solved

what two things lie at the base of every risk management concept - Answer the intersection of different types of risk a method for identifying, assessing, and treating all risks traditional risk assessment techniques focus on what - Answer root cause analysis - which identifies a loss's predominant cause what is wrong with Root Cause Analyses - Answer it can only look backward and might not catch all root causes what are the 3 steps in how big data transforms RM - Answer data capture data storage data analytics what enables data capture - Answer smart products - uses sensors and data collection/transmission in order to be more useful what allows a vast amount of data to be stored and shared - Answer cloud computing 4 ways insurers use data to provide better results/decisions - Answer organizing large volumes of new data discovering new relationships in data exploring new sources of data developing new products what is text mining - Answer obtaining information through language recognition what is Value at Risk - Answer a technique to quantify financial risk by measuring the likelihood of losing more than a specific dollar amount over a specific period of time what is one way organizations reduce downside risk - Answer threshold limits - basically management is alerted once established risk criteria triggers are hit how does risk management align with organizational objectives - Answer intelligent, strategic risk taking identification and management of cross enterprise risks improved capital allocation what 4 things make up cost of risk - Answer costs of accidental losses not reimbursed by insurance or other insurance premiums and expenses costs of risk control techniques costs of administering risk management techniques what benefits does an organization get from reducing uncertainty - Answer alleviates managements fears about potential losses increases profit potential makes the organization a safer investment what are the 6 basic risk measures - Answer exposure volatility likelihood consequences time horizon correlation how can you neutralize the risk of time horizons - Answer matching the duration of your assets and liabilities the most essential attribute of anyone who manages risk - Answer be able to classify it what is pure risk - Answer Chance of loss or no loss, no chance of gain what is speculative risk - Answer a risk situation that includes a chance of loss and a potential for gain. Speculative risks are not insurable. what 2 factors affect speculative risk the most - Answer price risk and credit risk what is price risk - Answer uncertainty about cash flows resulting from possible changes in the costs of inputs to the business what is credit risk - Answer the risk that customers or creditors fail to make payments insurable risks are generally classified as... - Answer pure objective diversifiable subjective risk - Answer The perceived amount of risk based on an individual's or organization's opinion. objective risk - Answer The measurable variation in uncertain outcomes based on facts and data. what 3 ways can subjective risk vary from objective risk - Answer familiarity and control consequences over likelihood risk awareness diversifiable risks - Answer not highly correlated and occurs randomly examples of nondiversifiable risk - Answer inflation unemployment natural disasters systemic risks - Answer the potential for major disruption in the function of an entire market or system. nondiversifiable what are the 4 quadrants of risk - Answer hazard operational strategic financial hazard and operational are ___ risks while financial and strategic are ___ risks - Answer pure speculative risk management framework - Answer A foundation for applying the risk management process throughout the organization. the 5 essential activities for risk management - Answer scan environment identify risks analyze risks treat risks monitor and review what are the 6 factors for risk criteria (info used to measure risk significance) - Answer causes of risk effects of risk metrics used to measure effects of risk timeframe of potential effects methods to determine level of risk approach to combinations of risk what are the 5 major options for treating risk - Answer avoid modify the likelihood or impact transfer retain exploit what are the 5 key purposes of monitoring risk - Answer determine the effectiveness of controls obtain info to improve risk assessment analyze events and their further consequences to understand trends, successes, failures observe changes in internal and external env. identify emerging risks 5 ways to have a clear and productive communication process - Answer set a clear objective analyze your audience decide when and where to talk pay attention to body language ask for feedback risktech - Answer risk monitoring and mitigation technology describe the risktech ecosystem - Answer emerging technologies coupled with Smart products provide data to big data analytics which allows for risk assessment and control what two parts make up a connected ecosystem - Answer physical and virtual domain the 3 types of specialized sensors and their definitions - Answer transducers - converts one form of energy into another actuator - a mechanical device that turns energy into motion accelerometer - measures acceleration motion or tilt what are the 4 categories of sensors - Answer mechanical biochemical thermal radiant what is a digital twin - Answer a separate digital profile of a physical object that helps identify risks arising from the object. The sensors on the physical object provide data to the digital twin which can remit actions back to the object