ARM 400: Risk in an Evolving World Exam Prep |Guide with Questions and Verified Answers| 100% Correct| Grade A (Latest 2023/ 2024 Update)

ARM 400,Risk in an Evolving World Exam Prep |Guide with Questions and Verified Answers| 100% Correct| Grade A (Latest 2023/ 2024 Update) Q: tolerable uncertainty components Answer: reduce downside risk, earnings stability, anticipate and recognize emerging risks, business continuity Q: continuity of operations Answer: essential goal for all public entities Q: holistic risk management goals Answer: tolerable uncertainty, profitability and growth, legal and regulatory compliance, social responsibility, reduced cost of risk, reduced deterrent effects of hazard risks Q: reduced deterrent effects of hazard risks Answer: -alleviates management's fears about potential losses -increases profit potential by greater participation in investment or production activities -makes org a safer investment and more attractive Q: basic risk measures Answer: exposure, volatility, likelihood, consequences, time horizon, correlation Q: exposure Answer: any conditions that presents a possibility of gain or loss, whether or not an actual loss occurs Q: volatility Answer: frequent fluctuations, such as in the price of an asset Q: likelihood Answer: a qualitative estimate of the certainty with which the outcome of a specific event can be predicted Q: consequences Answer: the effects, positive or negative, of an occurrence; big relationship with likelihood Q: time horizon Answer: estimated duration Q: correlation Answer: relationship between variables Q: risk classifications Answer: pure/speculative, subjective/objective, diversifiable/nondiversifiable, quadrants of risk Q: pure risk Answer: a chance of loss or no lose, but no chance of gain; building fire Q: speculative risk Answer: involves a chance of gain; highly affected price risk and credit risk Q: subjective risk Answer: the perceived amount of risk based on an individual's or org's opinion; may be quite different from actual risk; can exist even where objective risk does not Q: objective risk Answer: measurable variation in uncertain outcomes based on facts and data Q: ways subjective and objective risk can differ Answer: -familiarity and control: cars are actually more dangerous that planes -consequences over likelihood -risk awareness Q: diversifiable risk Answer: -risk that affects only some individuals, businesses, or small groups -can be managed through diversification -fire -not correlated Q: nondiversifiable risk Answer: -inflation, unemployment, and natural disasters -can't diversify -highly correlated Q: systemic risks