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ARM 400 Practice Exams - all chapters Questions with
Detailed Verified Answers
ARM 400 Questions with Detailed Verified Answers According to the law of large numbers, as the
number of exposure units insured increases, Ans: ✓ ✓ ✓ The relative accuracy of predictions
about future losses increases
The fundamental purpose of a risk management framework is to Ans: ✓ ✓ ✓ Integrate risk
management throughout the organization
Which one of the following provides a measure of the maximum potential damage associated with
an occurrence? Ans: ✓ ✓ ✓ Exposure
Aligning risks with the organization's risk appetite defines Ans: ✓ ✓ ✓ Tolerable uncertainty
An organization must meet the standard of care that it owes to others in order to ensure that Ans:
✓ ✓ ✓ Legal obligations are satisfied
Julian was having a conversation with Tania, one of his employees. At this point, Julian said, "What I
hear you say is that you would like to take on more responsibility. Is that correct?" Which one of the
following elements of active listening was Julian illustrating? Ans: ✓ ✓ ✓ Response
During the past year, International Toys has undertaken four capital projects. The company has
renovated and refurbished one of its aging warehouse buildings. It has purchased the most recent
version of its current order processing computer software. It has added two trucks to its fleet of
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delivery vehicles. Lastly, it has purchased a new production machine that will allow it to launch a
new product line. Which one of the following company projects is the most speculative risk? Ans:
✓ ✓ ✓ The new production machine
Encouraging the expression of feelings as well as facts and following up with employees on the
problems they report are two ways that managers and supervisors can Ans: ✓ ✓ ✓ Cultivate two-
way communication
Which one of the following risk management objectives is critical for a manufacturer seeking new
capital from investors, stockholders, and creditors? Ans: ✓ ✓ ✓ Reduce the deterrent effects of
hazard risks
Which one of the following is a tool that can be used by fraud investigators to compare documents
and analyze notes? Ans: ✓ ✓ ✓ Text mining
For an organization, a key performance indicator (KPI) measures the performance of a specific
activity at a predetermined level or amount. Which one of the following is an example of a KRI
based on a ratio? Ans: ✓ ✓ ✓ Inventory turnover
Before speaking with a group or individual, the speaker should think about what he or she wants
the other person(s) to do as a result of the conversation. Which one of the following steps in the
communication process does the speaker complete by doing this? Ans: ✓ ✓ ✓ Set a clear
communication objective
Mid-State Packing Company, a meat processing company, is the largest private sector employer in
Metro City. First National Bank of Metro City loans money to Mid-State Packaging Company and to
many of the employees of Mid-State. The problem with First National Bank of Metro City loaning
money to both the business and many employees of the business is that Ans: ✓ ✓ ✓ Loan defaults
are likely to be highly correlated
Which one of the following statements is true with regard to preventative analytics? Ans: ✓ ✓ ✓
Preventative analytics uses smart products and data analytics to identify root loss causes and their
implications.
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The emerging technologies applied to risk assessment and control link the physical domain to the
virtual domain. Together, these domains linked by the emerging technologies create a Ans: ✓ ✓ ✓
connected ecosystem
In addition to metal detector, many airports have installed a second type of scanning technology for
baggage and cargo. The checked bags and cargo pass through a portal with scanners programmed
to detect and test for explosive trace fumes. These scanners, which detect explosives based on air
samples, are an example of what type of sensor used for risk assessment and control? Ans: ✓ ✓ ✓
Biochemical sensors
Which one of the following uses infrared light to detect nearby objects? Ans: ✓ ✓ ✓ Lidar
SIR's use of drones, video, real-term video scanning, and computer analysis illustrates which one of
the following? Ans: ✓ ✓ ✓ Preventative analytics
Which one of the following should be part of an organization's standard operating procedures
(SOPs) concerning external stakeholder communications? Ans: ✓ ✓ ✓ Instructions regarding what
types of information can and cannot be released
When interviewing a risk owner, which one of the following questions should be asked? Ans: ✓ ✓
✓ What steps have been taken to ensure continuity of business in the event of a natural disaster?
A speaker imparts information in verbal communications by Ans: ✓ ✓ ✓ Having good listening
skills and expressing facts and emotions through words and sometimes visual displays
Which one of the following organizational policies or practices is based on a code of ethics? Ans: ✓
✓ ✓ A disclosure requirement regarding any potential conflict of interest an accountant might have
in working with specific clients
An organization evaluates key stakeholders' attitude toward risk in order to Ans: ✓ ✓ ✓
Understand what risks are acceptable and to develop an effective enterprise-wide risk management
program
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Twice a year, Medford Factory gives employees a day off to work in the community where the
factory is located. The employees prepare and serve a holiday meal for members of the community,
and they clean the neighborhood park in the spring. This practice is based on Medford Factory's
Ans: ✓ ✓ ✓ Social responsibility
Which one of the following types of risk is best handled at the risk center level? Ans: ✓ ✓ ✓ Minor
risks that do not have consequences outside the unit are best managed at the risk center level
Which one of the following statements is correct regarding an organizations code of ethics? Ans: ✓
✓ ✓ The code of ethics should include principles and concepts that are dynamic enough to remain
relevant in a rapidly changing business environment
One advantage that a national organization would derive from creating risk centers is that it Ans: ✓
✓ ✓ Allows for participation by operational managers who may contribute to the risk analysis
An organization evaluates key stakeholders attitude toward risk in order to Ans: ✓ ✓ ✓ Understand
what risks are acceptable and to develop an effective enterprise-wide risk management program
Which one of the following measures the progress an organization has made toward attaining it's
goals within a specific amount of time? Ans: ✓ ✓ ✓ Key performance indicator
One of the strategic objectives for Cromley Insurance Group is customer satisfaction. Which one of
the following is a critical success factor (CSF) that would help refine this strategic objective? Ans: ✓
✓ ✓ High customer retention
Which one of the following terms refers to information used as a basis for measuring the
significance of a risk? Ans: ✓ ✓ ✓ Risk criteria
Key risk indicators (KRIs) can be established for various levels within an organization. Which one of
the following levels of an organization usually has the most detailed KRIs? Ans: ✓ ✓ ✓ Department
level
© Get it right 2025 Getaway - Stuvia US All rights reserved
ARM 400 Practice Exams - all chapters Questions with
Detailed Verified Answers
ARM 400 Questions with Detailed Verified Answers According to the law of large numbers, as the
number of exposure units insured increases, Ans: ✓ ✓ ✓ The relative accuracy of predictions
about future losses increases
The fundamental purpose of a risk management framework is to Ans: ✓ ✓ ✓ Integrate risk
management throughout the organization
Which one of the following provides a measure of the maximum potential damage associated with
an occurrence? Ans: ✓ ✓ ✓ Exposure
Aligning risks with the organization's risk appetite defines Ans: ✓ ✓ ✓ Tolerable uncertainty
An organization must meet the standard of care that it owes to others in order to ensure that Ans:
✓ ✓ ✓ Legal obligations are satisfied
Julian was having a conversation with Tania, one of his employees. At this point, Julian said, "What I
hear you say is that you would like to take on more responsibility. Is that correct?" Which one of the
following elements of active listening was Julian illustrating? Ans: ✓ ✓ ✓ Response
During the past year, International Toys has undertaken four capital projects. The company has
renovated and refurbished one of its aging warehouse buildings. It has purchased the most recent
version of its current order processing computer software. It has added two trucks to its fleet of
© Get it right 2025 Getaway - Stuvia US All rights reserved
,Click here for more: Scholars nexus
delivery vehicles. Lastly, it has purchased a new production machine that will allow it to launch a
new product line. Which one of the following company projects is the most speculative risk? Ans:
✓ ✓ ✓ The new production machine
Encouraging the expression of feelings as well as facts and following up with employees on the
problems they report are two ways that managers and supervisors can Ans: ✓ ✓ ✓ Cultivate two-
way communication
Which one of the following risk management objectives is critical for a manufacturer seeking new
capital from investors, stockholders, and creditors? Ans: ✓ ✓ ✓ Reduce the deterrent effects of
hazard risks
Which one of the following is a tool that can be used by fraud investigators to compare documents
and analyze notes? Ans: ✓ ✓ ✓ Text mining
For an organization, a key performance indicator (KPI) measures the performance of a specific
activity at a predetermined level or amount. Which one of the following is an example of a KRI
based on a ratio? Ans: ✓ ✓ ✓ Inventory turnover
Before speaking with a group or individual, the speaker should think about what he or she wants
the other person(s) to do as a result of the conversation. Which one of the following steps in the
communication process does the speaker complete by doing this? Ans: ✓ ✓ ✓ Set a clear
communication objective
Mid-State Packing Company, a meat processing company, is the largest private sector employer in
Metro City. First National Bank of Metro City loans money to Mid-State Packaging Company and to
many of the employees of Mid-State. The problem with First National Bank of Metro City loaning
money to both the business and many employees of the business is that Ans: ✓ ✓ ✓ Loan defaults
are likely to be highly correlated
Which one of the following statements is true with regard to preventative analytics? Ans: ✓ ✓ ✓
Preventative analytics uses smart products and data analytics to identify root loss causes and their
implications.
© Get it right 2025 Getaway - Stuvia US All rights reserved
,Click here for more: Scholars nexus
The emerging technologies applied to risk assessment and control link the physical domain to the
virtual domain. Together, these domains linked by the emerging technologies create a Ans: ✓ ✓ ✓
connected ecosystem
In addition to metal detector, many airports have installed a second type of scanning technology for
baggage and cargo. The checked bags and cargo pass through a portal with scanners programmed
to detect and test for explosive trace fumes. These scanners, which detect explosives based on air
samples, are an example of what type of sensor used for risk assessment and control? Ans: ✓ ✓ ✓
Biochemical sensors
Which one of the following uses infrared light to detect nearby objects? Ans: ✓ ✓ ✓ Lidar
SIR's use of drones, video, real-term video scanning, and computer analysis illustrates which one of
the following? Ans: ✓ ✓ ✓ Preventative analytics
Which one of the following should be part of an organization's standard operating procedures
(SOPs) concerning external stakeholder communications? Ans: ✓ ✓ ✓ Instructions regarding what
types of information can and cannot be released
When interviewing a risk owner, which one of the following questions should be asked? Ans: ✓ ✓
✓ What steps have been taken to ensure continuity of business in the event of a natural disaster?
A speaker imparts information in verbal communications by Ans: ✓ ✓ ✓ Having good listening
skills and expressing facts and emotions through words and sometimes visual displays
Which one of the following organizational policies or practices is based on a code of ethics? Ans: ✓
✓ ✓ A disclosure requirement regarding any potential conflict of interest an accountant might have
in working with specific clients
An organization evaluates key stakeholders' attitude toward risk in order to Ans: ✓ ✓ ✓
Understand what risks are acceptable and to develop an effective enterprise-wide risk management
program
© Get it right 2025 Getaway - Stuvia US All rights reserved
, Click here for more: Scholars nexus
Twice a year, Medford Factory gives employees a day off to work in the community where the
factory is located. The employees prepare and serve a holiday meal for members of the community,
and they clean the neighborhood park in the spring. This practice is based on Medford Factory's
Ans: ✓ ✓ ✓ Social responsibility
Which one of the following types of risk is best handled at the risk center level? Ans: ✓ ✓ ✓ Minor
risks that do not have consequences outside the unit are best managed at the risk center level
Which one of the following statements is correct regarding an organizations code of ethics? Ans: ✓
✓ ✓ The code of ethics should include principles and concepts that are dynamic enough to remain
relevant in a rapidly changing business environment
One advantage that a national organization would derive from creating risk centers is that it Ans: ✓
✓ ✓ Allows for participation by operational managers who may contribute to the risk analysis
An organization evaluates key stakeholders attitude toward risk in order to Ans: ✓ ✓ ✓ Understand
what risks are acceptable and to develop an effective enterprise-wide risk management program
Which one of the following measures the progress an organization has made toward attaining it's
goals within a specific amount of time? Ans: ✓ ✓ ✓ Key performance indicator
One of the strategic objectives for Cromley Insurance Group is customer satisfaction. Which one of
the following is a critical success factor (CSF) that would help refine this strategic objective? Ans: ✓
✓ ✓ High customer retention
Which one of the following terms refers to information used as a basis for measuring the
significance of a risk? Ans: ✓ ✓ ✓ Risk criteria
Key risk indicators (KRIs) can be established for various levels within an organization. Which one of
the following levels of an organization usually has the most detailed KRIs? Ans: ✓ ✓ ✓ Department
level
© Get it right 2025 Getaway - Stuvia US All rights reserved
