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ARM 400 Exam Practice Questions And
Answers |Latest 2025 | Guaranteed Pass.
When communicating a decision up the organization's chain of command, consulting with
outside experts can help a risk management professional do which one of the following?
A. Seek feedback from stakeholders
B. Stay focused on the organization's objectives
C. Define the organization's risk appetite
D. Enhance stakeholders' confidence in the process - Answer✔D
Which of the following risk management program goals is an essential goal for all public
entities?
A. Earning stability
B. Continuity of operations
C. Growth
D. Survival - Answer✔B
The traditional definition of risk management reflects the traditional concept of risk as
A. Both positive and negative.
B. Negative.
C. Uncontrollable.
D. Strategic. - Answer✔B
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?
1
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 9:50PM.
A. The two new trucks
B. The warehouse refurbishment
C. The software upgrade
D. The new production machine - Answer✔D
Which one of the following statements is true regarding the basic measures that apply to risk
management?
A. Consequences measure the degree to which an occurrence could positively or negatively
affect an organization.
B. Hedging is a risk management strategy that can reduce the risk of correlation.
C. Risk increases as volatility decreases.
D. Longer time horizons are generally less risky that shorter ones. - Answer✔A
Which one of the following provides a measure of the maximum potential damage associated
with an occurrence?
A. Exposure
B. Duration
C. Underwriting risk
D. Maximum probable loss - Answer✔A
Samuel was recently hired as a risk management professional for Parker Property Management.
He has been asked by senior management to review the organization's current insurance
policies to make sure that the organization is adequately protected, and also see if there are
any opportunities to save on the premiums. Samuel must do which one of the following
through internal communication before he will be able to complete this task?
A. Determine the organization's risk appetite
B. Identify all of the risks that the organization faces
C. Earn the confidence of the organization's board of directors
D. Become familiar with industry regulations - Answer✔A
Catastrophes such as recent earthquakes and the 2011 tsunami in Japan pointed out a need for
many organizations to evaluate and manage their
A. Supply-chain risk.
B. Derivative risk.
C. Compliance risk.
2
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 9:50PM.
D. Political risk. - Answer✔A
Risk management professionals must collaborate with data analysts during which two steps of
the risk management process?
A. Treat risks and monitor risk treatments
B. Scan the environment and analyze risks
C. Analyze risks and monitor risk treatments
D. Identify risks and treat risks - Answer✔C
Asking a question such as "How do you think this will work out?" can help a speaker do which
one of the following?
A. Request feedback and determine if the message has been understood
B. Gain the support of executives and decision makers
C. Build trust among a diverse group of individuals
D. Deliver a message that recipients don't want to hear - Answer✔A
Carla, the risk manager, was asked by senior management to deliver a presentation on cyber
risk at an all employees meeting. Even though she was only allotted 30 minutes for her
presentation, Carla felt that cyber risk was a very real risk for the corporation and she wanted
employees to leave with some fear of it. She wanted to provide employees with as much
technical information as possible, and familiarize them with all of the important jargon. Less
than 20 minutes into her presentation, Carla could tell that many of the employees were not
paying any attention to her presentation. Which one of the following steps in the
communication process had Carla failed to consider?
A. Pay attention to your body language
B. Ask for feedback
C. Analyze your audience
D. Set a clear communication objective - Answer✔C
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?
A. Deliver a message the recipient(s) want to hear
B. Set aside judgement
C. Set a clear communication objective
D. Analyze your audience - Answer✔C
3
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 9:50PM.
Which one of the following risk management objectives is critical for a manufacturer seeking
new capital from investors, stockholders, and creditors?
A. Anticipate and recognize emerging risks
B. Social responsibility
C. Reduce the deterrent effects of hazard risks
D. Eliminate downside risk - Answer✔C
Which one of the following data capture tools has led to an explosion of risk management
innovation by allowing smart products to transmit data to each other and to central hubs?
A. Blockchain
B. Cloud computing
C. Internet of Things
D. Artificial intelligence - Answer✔C
Jean is the Risk Manager for a Fortune 1000 company. Her CFO has tasked her to analyze
vulnerabilities in the firm's supply chain. The adequacy of suppliers to meet an organization's
needs would be an example of which one of the following types of risk?
A. Financial risk
B. Strategic risk
C. Operating risk
D. Operational risk - Answer✔D
An organization must meet the standard of care that it owes to others in order to ensure that
A. Legal obligations are satisfied.
B. Post-loss goals are in place.
C. Operations are efficient.
D. Contracts are not breached. - Answer✔A
According to the law of large numbers, as the number of exposure units insured increases,
A. Fewer losses are expected to occur.
B. The size of the average loss declines.
C. The relative accuracy of predictions about future losses increases.
D. The probability of an underwriting loss increases. - Answer✔C
4
ARM 400 Exam Practice Questions And
Answers |Latest 2025 | Guaranteed Pass.
When communicating a decision up the organization's chain of command, consulting with
outside experts can help a risk management professional do which one of the following?
A. Seek feedback from stakeholders
B. Stay focused on the organization's objectives
C. Define the organization's risk appetite
D. Enhance stakeholders' confidence in the process - Answer✔D
Which of the following risk management program goals is an essential goal for all public
entities?
A. Earning stability
B. Continuity of operations
C. Growth
D. Survival - Answer✔B
The traditional definition of risk management reflects the traditional concept of risk as
A. Both positive and negative.
B. Negative.
C. Uncontrollable.
D. Strategic. - Answer✔B
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?
1
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 9:50PM.
A. The two new trucks
B. The warehouse refurbishment
C. The software upgrade
D. The new production machine - Answer✔D
Which one of the following statements is true regarding the basic measures that apply to risk
management?
A. Consequences measure the degree to which an occurrence could positively or negatively
affect an organization.
B. Hedging is a risk management strategy that can reduce the risk of correlation.
C. Risk increases as volatility decreases.
D. Longer time horizons are generally less risky that shorter ones. - Answer✔A
Which one of the following provides a measure of the maximum potential damage associated
with an occurrence?
A. Exposure
B. Duration
C. Underwriting risk
D. Maximum probable loss - Answer✔A
Samuel was recently hired as a risk management professional for Parker Property Management.
He has been asked by senior management to review the organization's current insurance
policies to make sure that the organization is adequately protected, and also see if there are
any opportunities to save on the premiums. Samuel must do which one of the following
through internal communication before he will be able to complete this task?
A. Determine the organization's risk appetite
B. Identify all of the risks that the organization faces
C. Earn the confidence of the organization's board of directors
D. Become familiar with industry regulations - Answer✔A
Catastrophes such as recent earthquakes and the 2011 tsunami in Japan pointed out a need for
many organizations to evaluate and manage their
A. Supply-chain risk.
B. Derivative risk.
C. Compliance risk.
2
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 9:50PM.
D. Political risk. - Answer✔A
Risk management professionals must collaborate with data analysts during which two steps of
the risk management process?
A. Treat risks and monitor risk treatments
B. Scan the environment and analyze risks
C. Analyze risks and monitor risk treatments
D. Identify risks and treat risks - Answer✔C
Asking a question such as "How do you think this will work out?" can help a speaker do which
one of the following?
A. Request feedback and determine if the message has been understood
B. Gain the support of executives and decision makers
C. Build trust among a diverse group of individuals
D. Deliver a message that recipients don't want to hear - Answer✔A
Carla, the risk manager, was asked by senior management to deliver a presentation on cyber
risk at an all employees meeting. Even though she was only allotted 30 minutes for her
presentation, Carla felt that cyber risk was a very real risk for the corporation and she wanted
employees to leave with some fear of it. She wanted to provide employees with as much
technical information as possible, and familiarize them with all of the important jargon. Less
than 20 minutes into her presentation, Carla could tell that many of the employees were not
paying any attention to her presentation. Which one of the following steps in the
communication process had Carla failed to consider?
A. Pay attention to your body language
B. Ask for feedback
C. Analyze your audience
D. Set a clear communication objective - Answer✔C
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?
A. Deliver a message the recipient(s) want to hear
B. Set aside judgement
C. Set a clear communication objective
D. Analyze your audience - Answer✔C
3
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 9:50PM.
Which one of the following risk management objectives is critical for a manufacturer seeking
new capital from investors, stockholders, and creditors?
A. Anticipate and recognize emerging risks
B. Social responsibility
C. Reduce the deterrent effects of hazard risks
D. Eliminate downside risk - Answer✔C
Which one of the following data capture tools has led to an explosion of risk management
innovation by allowing smart products to transmit data to each other and to central hubs?
A. Blockchain
B. Cloud computing
C. Internet of Things
D. Artificial intelligence - Answer✔C
Jean is the Risk Manager for a Fortune 1000 company. Her CFO has tasked her to analyze
vulnerabilities in the firm's supply chain. The adequacy of suppliers to meet an organization's
needs would be an example of which one of the following types of risk?
A. Financial risk
B. Strategic risk
C. Operating risk
D. Operational risk - Answer✔D
An organization must meet the standard of care that it owes to others in order to ensure that
A. Legal obligations are satisfied.
B. Post-loss goals are in place.
C. Operations are efficient.
D. Contracts are not breached. - Answer✔A
According to the law of large numbers, as the number of exposure units insured increases,
A. Fewer losses are expected to occur.
B. The size of the average loss declines.
C. The relative accuracy of predictions about future losses increases.
D. The probability of an underwriting loss increases. - Answer✔C
4
