ARM 401 PRACTICE EXAM QUESTIONS
A process in which managers perform an annual self audit of the level of confidence
they have in the risk management culture, practice, and procedures of their area is
called
A. An underwriting audit
B. A Risk Management Review
C. A control risk self-assessment
D. A reunderwriting process - Answers -C. A control risk self assessment
ABC Life Insurance Company is concerned about the number of withdrawals or
surrendered policies in a short amount of time causing a need for large amounts of
cash. This concern is considered:
A. Liquidity Risk
B. Inherent Risk
C. Residual Risk - Answers -A. Liquidity Risk
Which one of the following statements is true regarding probability distributions in
forecasting?
A. Probability distributions do not include every possible outcome
B. The sum of probabilities in a distribution must equal 1.0
C. A properly constructed probability distribution contains outcomes that are
simultaneously redundant and restricted
D. Theoretical probabilities are unsuited to creating probability distributions because of
their reliance on actual experience - Answers -B. the sum of probabilities in a
distribution must equal 1.0
Which one of the following Internet of Things Devices has greatly influenced driver and
vehicle safety?
A. Blockchain
B. Drones
C. Robots
D. Telematics - Answers -D. Telematics
One aspect of the failure modes and effects analysis (FMEA) is the examination that
identifies the most important aspects of a system and ranks the severity of losing each
component. This examination is called which of the following?
A. Maximum Probable Loss Analysis
B. Criticality Analysis
C. Root Cause Analysis
D. Sensitivity Analysis - Answers -B. Criticality Analysis
Which one of the following is an example of intangible property exposed to theft as the
result of a cyber attack?
A. Computer Software
, B. Credit Card Numbers
C. Money and Securities
D. Computer Hardware - Answers -B. Credit Card Numbers
Patricia's pies is a small bakery that makes various types of fruit pies. the pies are only
sold at local markets. Patricia's is loyal to the local community and has always
depended on a local farmer to supply the fruit for the pies. Due to drought conditions
this year, the local farmers crops have been poor and he has been unable to meet the
supply needs for Patrica's Pies. Patricia's is now contacting other local farmers to try to
meet its fresh fruit demand, but the supplies are limited and prices are high. which one
of the following external threats in the supply chain is Patricia's facing?
A. Single Source Supplier
B. Geopolitical environment
C. Sole Source Supplier
D. change in demand level - Answers -A. Single Source Supplier
A risk manager and safety engineer need to consider which of the following
interdependent elements when evaluating the premise condition?
A. Ergonomic stress
B. Air quality and movement
C. Construction, occupancy, protection, and external exposures
D. Temperature extremes - Answers -C. Construction, occupancy, protection, and
external exposures
in a fishbone diagram, the diagonal lines (the fish's bones) emanating from the
horizontal arrow (the fish's spine) represent which of the following
A. Effects
B. Recommendations
C. The problem being investigated
D. Causes - Answers -D. Causes
A conscious decision to act or not to act, that reduces the frequency/severity of losses
or makes losses more predictable is
A. A consequence of risk
B. Risk prevention
C. A risk source
D. Risk Control - Answers -D. Risk Control
A year ago, Durham Insurance began using Classic Body Works (CBW), rather than its
own claim adjusters, to perform appraisals for auto damage claims. Durham has
collected feedback on CBW from policyholders over the year. The insurer would like to
use text mining to analyze the unstructured data and see if the overall opinion of CBW
is positive, negative, or neutral. This type of analysis is known as
A. A semantic network.
B. Poisson distribution.
C. Sentiment analysis.
A process in which managers perform an annual self audit of the level of confidence
they have in the risk management culture, practice, and procedures of their area is
called
A. An underwriting audit
B. A Risk Management Review
C. A control risk self-assessment
D. A reunderwriting process - Answers -C. A control risk self assessment
ABC Life Insurance Company is concerned about the number of withdrawals or
surrendered policies in a short amount of time causing a need for large amounts of
cash. This concern is considered:
A. Liquidity Risk
B. Inherent Risk
C. Residual Risk - Answers -A. Liquidity Risk
Which one of the following statements is true regarding probability distributions in
forecasting?
A. Probability distributions do not include every possible outcome
B. The sum of probabilities in a distribution must equal 1.0
C. A properly constructed probability distribution contains outcomes that are
simultaneously redundant and restricted
D. Theoretical probabilities are unsuited to creating probability distributions because of
their reliance on actual experience - Answers -B. the sum of probabilities in a
distribution must equal 1.0
Which one of the following Internet of Things Devices has greatly influenced driver and
vehicle safety?
A. Blockchain
B. Drones
C. Robots
D. Telematics - Answers -D. Telematics
One aspect of the failure modes and effects analysis (FMEA) is the examination that
identifies the most important aspects of a system and ranks the severity of losing each
component. This examination is called which of the following?
A. Maximum Probable Loss Analysis
B. Criticality Analysis
C. Root Cause Analysis
D. Sensitivity Analysis - Answers -B. Criticality Analysis
Which one of the following is an example of intangible property exposed to theft as the
result of a cyber attack?
A. Computer Software
, B. Credit Card Numbers
C. Money and Securities
D. Computer Hardware - Answers -B. Credit Card Numbers
Patricia's pies is a small bakery that makes various types of fruit pies. the pies are only
sold at local markets. Patricia's is loyal to the local community and has always
depended on a local farmer to supply the fruit for the pies. Due to drought conditions
this year, the local farmers crops have been poor and he has been unable to meet the
supply needs for Patrica's Pies. Patricia's is now contacting other local farmers to try to
meet its fresh fruit demand, but the supplies are limited and prices are high. which one
of the following external threats in the supply chain is Patricia's facing?
A. Single Source Supplier
B. Geopolitical environment
C. Sole Source Supplier
D. change in demand level - Answers -A. Single Source Supplier
A risk manager and safety engineer need to consider which of the following
interdependent elements when evaluating the premise condition?
A. Ergonomic stress
B. Air quality and movement
C. Construction, occupancy, protection, and external exposures
D. Temperature extremes - Answers -C. Construction, occupancy, protection, and
external exposures
in a fishbone diagram, the diagonal lines (the fish's bones) emanating from the
horizontal arrow (the fish's spine) represent which of the following
A. Effects
B. Recommendations
C. The problem being investigated
D. Causes - Answers -D. Causes
A conscious decision to act or not to act, that reduces the frequency/severity of losses
or makes losses more predictable is
A. A consequence of risk
B. Risk prevention
C. A risk source
D. Risk Control - Answers -D. Risk Control
A year ago, Durham Insurance began using Classic Body Works (CBW), rather than its
own claim adjusters, to perform appraisals for auto damage claims. Durham has
collected feedback on CBW from policyholders over the year. The insurer would like to
use text mining to analyze the unstructured data and see if the overall opinion of CBW
is positive, negative, or neutral. This type of analysis is known as
A. A semantic network.
B. Poisson distribution.
C. Sentiment analysis.
