ARM 400 Practice Exam (all chapters)
Questions & Answers18
Risk Tolerance - ANSWERS-Amount of risk an organization is able to bear given its financial
capacity
Rules based or principles based: Restaurant employees must wash their hands every they use
the restroom - ANSWERS-Rules based
Rules based or principles based: Restaurant managers must ensure that employees maintain
high standards of hygiene - ANSWERS-Principles based
Rules based or principles based: Corporations must fairly and accurately report on the financial
condition of the firm to all stakeholders - ANSWERS-Principles based
Rules based or principles based: Senior management must sign a corporation's financial
statements to certify that they are a fair and accurate depiction of the financial condition of the
firm - ANSWERS-Riules based
risk-based regulation - ANSWERS-A risk management approach to allocating resources to
address risks in a way that will achieve the greatest good
Evidence based regulation - ANSWERS-A regulatory approach that collects and uses objective
performance data to set, evaluate, and improve policies
A CSF answers the question - ANSWERS-What will make our organization a success
,A KPI answers the question - ANSWERS-What shows that we are a success
According to the law of large numbers, as the number of exposure units insured increases, -
ANSWERS-The relative accuracy of predictions about future losses increases
The fundamental purpose of a risk management framework is to - ANSWERS-Integrate risk
management throughout the organization
Which one of the following provides a measure of the maximum potential damage associated
with an occurrence? - ANSWERS-Exposure
Aligning risks with the organization's risk appetite defines - ANSWERS-Tolerable uncertainty
An organization must meet the standard of care that it owes to others in order to ensure that -
ANSWERS-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? - ANSWERS-
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 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? - ANSWERS-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 - ANSWERS-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? - ANSWERS-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? - ANSWERS-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? - ANSWERS-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? - ANSWERS-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 - ANSWERS-
Loan defaults are likely to be highly correlated
Which one of the following statements is true with regard to preventative analytics? -
ANSWERS-Preventative analytics uses smart products and data analytics to identify root loss
causes and their implications.
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 -
ANSWERS-connected ecosystem
Questions & Answers18
Risk Tolerance - ANSWERS-Amount of risk an organization is able to bear given its financial
capacity
Rules based or principles based: Restaurant employees must wash their hands every they use
the restroom - ANSWERS-Rules based
Rules based or principles based: Restaurant managers must ensure that employees maintain
high standards of hygiene - ANSWERS-Principles based
Rules based or principles based: Corporations must fairly and accurately report on the financial
condition of the firm to all stakeholders - ANSWERS-Principles based
Rules based or principles based: Senior management must sign a corporation's financial
statements to certify that they are a fair and accurate depiction of the financial condition of the
firm - ANSWERS-Riules based
risk-based regulation - ANSWERS-A risk management approach to allocating resources to
address risks in a way that will achieve the greatest good
Evidence based regulation - ANSWERS-A regulatory approach that collects and uses objective
performance data to set, evaluate, and improve policies
A CSF answers the question - ANSWERS-What will make our organization a success
,A KPI answers the question - ANSWERS-What shows that we are a success
According to the law of large numbers, as the number of exposure units insured increases, -
ANSWERS-The relative accuracy of predictions about future losses increases
The fundamental purpose of a risk management framework is to - ANSWERS-Integrate risk
management throughout the organization
Which one of the following provides a measure of the maximum potential damage associated
with an occurrence? - ANSWERS-Exposure
Aligning risks with the organization's risk appetite defines - ANSWERS-Tolerable uncertainty
An organization must meet the standard of care that it owes to others in order to ensure that -
ANSWERS-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? - ANSWERS-
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 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? - ANSWERS-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 - ANSWERS-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? - ANSWERS-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? - ANSWERS-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? - ANSWERS-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? - ANSWERS-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 - ANSWERS-
Loan defaults are likely to be highly correlated
Which one of the following statements is true with regard to preventative analytics? -
ANSWERS-Preventative analytics uses smart products and data analytics to identify root loss
causes and their implications.
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 -
ANSWERS-connected ecosystem
