ARM 400: RISK IN AN EVOLVING WORLD EXAM
REVIEW 2024-2025|QUESTIONS AND VERIFIED
ANSWERS| 100% CORRECT| GRADE A
Risk-Based Regulation - CORRECT ANSWER✔✔A risk
management approach to allocating resources to address risks in
a way that will achieve the greatest good.
Evidence-Based Regulation - CORRECT ANSWER✔✔A
regulatory approach that collects and uses objective performance
data to set, evaluate, and improve policies.
Sec A.1.
Catastrophes such as recent earthquakes and the 2011 tsunami
in Japan pointed out a need for many organizations to evaluate
and manage their
A. Compliance risk.
B. Political risk.
C. Supply-chain risk.
D. Derivative risk. - CORRECT ANSWER✔✔C. Supply-chain
risk.Correct. Catastrophes such as recent earthquakes and the
2011 tsunami in Japan pointed out a need for many organizations
to evaluate and manage their supply-chain risk.
Sc A.1.
Which one of the following risk management program goals
enhances an organization's reputation?
A. Survival
B. Tolerable uncertainty
,C. Economy of operations
D. Social responsibility - CORRECT ANSWER✔✔D. Social
responsibilityCorrect. Social responsibility is the risk management
program goal that will most likely enhance an organization's
reputation.
Sec. A.1.
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 Packing 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
A. Loan defaults are likely to be highly correlated.
B. The interest rate charged on the loans must be equal.
C. There will be a mismatch between fixed-rate and variable-rate
loans.
D. The loan durations must be the same. - CORRECT ANSWER
✔✔A. Loan defaults are likely to be highly correlated
Sec A.1.
Which one of the following is an internal source that can often
provide information regarding risks that aren't obvious?
A. Board of directors
B. Production manager
C. Human resources
D. Internal auditing - CORRECT ANSWER✔✔D. Internal
auditing
Sec A.1.
The fundamental purpose of a risk management framework is to
A. Integrate risk management throughout the organization.
B. Maximize profits for all stakeholders.
C. Reduce the cost of risk.
,D. Define and eliminate potential losses. - CORRECT ANSWER
✔✔A. Integrate risk management throughout the
organization.Correct. The fundamental purpose of a risk
management framework is to integrate risk management
throughout the organization.
Sec.A.1.
Risk management professionals must collaborate with data
analysts during which two steps of the risk management process?
A. Identify risks and treat risks
B. Treat risks and monitor risk treatments
C. Scan the environment and analyze risks
D. Analyze risks and monitor risk treatments - CORRECT
ANSWER✔✔D. Analyze risks and monitor risk treatments
Sec.A.1
Carol has worked as a payroll clerk for a small organization for 20
years. Over the years she received only two small salary
increases and began to embezzle funds from the company since
she felt she was not adequately compensated for her job efforts.
In terms of the quadrants of risk, Carol's theft risk can be
classified as
A. Both a hazard risk and an operational risk.
B. A strategic risk.
C. A financial risk
D. Both a hazard risk and a financial risk. - CORRECT ANSWER
✔✔A. Both a hazard risk and an operational risk.
SecA.1.
Classifying risk appropriately can help in managing risk. Which
one of the following statements is correct with respect to the
classifications of risk?
A. Risk classifications are mutually exclusive, and only one can
be applied to any given risk.
, B. A pure risk is a chance of loss or no loss, but no chance of
gain.
C. Usually, pure risks and speculative risks can be managed
using the same techniques.
D. Insurance deals primarily with speculative risk, rather than with
pure risk. - CORRECT ANSWER✔✔B. A pure risk is a chance of
loss or no loss, but no chance of gain.
Sec A.1.
Aligning risks with the organization's risk appetite defines
A. Social responsibility.
B. Value at risk.
C. Compliance.
D. Tolerable uncertainty. - CORRECT ANSWER✔✔D. Tolerable
uncertainty.Correct. Aligning risks with the organization's risk
appetite defines tolerable uncertainty.
Sec A.1
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
A. Cultivate two-way communication
B. Maintain control of the conversation.
C. Support diverse groups.
D. Facilitate active listening. - CORRECT ANSWER✔✔A.
Cultivate two-way communication.Correct. Following up with
employees on the problems they report and encouraging the
expression of feelings as well as facts are two ways that
managers and supervisors can cultivate two-way communication.
Sec A.1.
REVIEW 2024-2025|QUESTIONS AND VERIFIED
ANSWERS| 100% CORRECT| GRADE A
Risk-Based Regulation - CORRECT ANSWER✔✔A risk
management approach to allocating resources to address risks in
a way that will achieve the greatest good.
Evidence-Based Regulation - CORRECT ANSWER✔✔A
regulatory approach that collects and uses objective performance
data to set, evaluate, and improve policies.
Sec A.1.
Catastrophes such as recent earthquakes and the 2011 tsunami
in Japan pointed out a need for many organizations to evaluate
and manage their
A. Compliance risk.
B. Political risk.
C. Supply-chain risk.
D. Derivative risk. - CORRECT ANSWER✔✔C. Supply-chain
risk.Correct. Catastrophes such as recent earthquakes and the
2011 tsunami in Japan pointed out a need for many organizations
to evaluate and manage their supply-chain risk.
Sc A.1.
Which one of the following risk management program goals
enhances an organization's reputation?
A. Survival
B. Tolerable uncertainty
,C. Economy of operations
D. Social responsibility - CORRECT ANSWER✔✔D. Social
responsibilityCorrect. Social responsibility is the risk management
program goal that will most likely enhance an organization's
reputation.
Sec. A.1.
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 Packing 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
A. Loan defaults are likely to be highly correlated.
B. The interest rate charged on the loans must be equal.
C. There will be a mismatch between fixed-rate and variable-rate
loans.
D. The loan durations must be the same. - CORRECT ANSWER
✔✔A. Loan defaults are likely to be highly correlated
Sec A.1.
Which one of the following is an internal source that can often
provide information regarding risks that aren't obvious?
A. Board of directors
B. Production manager
C. Human resources
D. Internal auditing - CORRECT ANSWER✔✔D. Internal
auditing
Sec A.1.
The fundamental purpose of a risk management framework is to
A. Integrate risk management throughout the organization.
B. Maximize profits for all stakeholders.
C. Reduce the cost of risk.
,D. Define and eliminate potential losses. - CORRECT ANSWER
✔✔A. Integrate risk management throughout the
organization.Correct. The fundamental purpose of a risk
management framework is to integrate risk management
throughout the organization.
Sec.A.1.
Risk management professionals must collaborate with data
analysts during which two steps of the risk management process?
A. Identify risks and treat risks
B. Treat risks and monitor risk treatments
C. Scan the environment and analyze risks
D. Analyze risks and monitor risk treatments - CORRECT
ANSWER✔✔D. Analyze risks and monitor risk treatments
Sec.A.1
Carol has worked as a payroll clerk for a small organization for 20
years. Over the years she received only two small salary
increases and began to embezzle funds from the company since
she felt she was not adequately compensated for her job efforts.
In terms of the quadrants of risk, Carol's theft risk can be
classified as
A. Both a hazard risk and an operational risk.
B. A strategic risk.
C. A financial risk
D. Both a hazard risk and a financial risk. - CORRECT ANSWER
✔✔A. Both a hazard risk and an operational risk.
SecA.1.
Classifying risk appropriately can help in managing risk. Which
one of the following statements is correct with respect to the
classifications of risk?
A. Risk classifications are mutually exclusive, and only one can
be applied to any given risk.
, B. A pure risk is a chance of loss or no loss, but no chance of
gain.
C. Usually, pure risks and speculative risks can be managed
using the same techniques.
D. Insurance deals primarily with speculative risk, rather than with
pure risk. - CORRECT ANSWER✔✔B. A pure risk is a chance of
loss or no loss, but no chance of gain.
Sec A.1.
Aligning risks with the organization's risk appetite defines
A. Social responsibility.
B. Value at risk.
C. Compliance.
D. Tolerable uncertainty. - CORRECT ANSWER✔✔D. Tolerable
uncertainty.Correct. Aligning risks with the organization's risk
appetite defines tolerable uncertainty.
Sec A.1
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
A. Cultivate two-way communication
B. Maintain control of the conversation.
C. Support diverse groups.
D. Facilitate active listening. - CORRECT ANSWER✔✔A.
Cultivate two-way communication.Correct. Following up with
employees on the problems they report and encouraging the
expression of feelings as well as facts are two ways that
managers and supervisors can cultivate two-way communication.
Sec A.1.
