ARM 401 Study Guide UPDATED ACTUAL Questions and CORRECT
Answers
1. Strategic Risk Uncertainties associated with the organization's long-term
goals and management decisions
2. Operational Risk Uncertainties associated with the organization's procedures,
systems, and policies
3. Financial Risk Uncertainties associated with the organization's financial ac-
tivities
4. Cloud Computing enables organizations to store and share all this data through
wireless internet and networking services
5. Telematics in Automobiles creating a picture of an insured's driving habits by measuring
(IOT & Telematics) acceleration, speed, braking, and distance traveled
6. Sensors in Buildings (IOT & monitor things such as heat, moisture, noise, and air quality
Telematics)
7. Drones (IOT & Telematics) take photos or videos of diflcult-to-reach areas to assess
damage and danger
8. Smartphone and Tablets (IOT connect with others through voice, text, and video, as well as
& Telematics) provide a host of other services, including global positioning
system (GPS) tracking
9. Health Tracker (IOT & Telemat- measure heart rate, steps walked, and sleep patterns
ics)
10. Robots (IOT & Telematics) assess damage and monitor hazards and environmental con-
ditions
11. High-Definition Cameras with scan inspect buildings, bridges, and other structures for signs
Sensors (IOT & Telematics) of erosion and other risks
,12. Monte Carlo Simulation a statistical computer model that simulates the effects that
various types of uncertainty may have on a process. A comput-
er will randomly select values for each variable and generate
thousands of scenarios.
13. Facilitated Workshops a neutral party, who has no stake in the outcome or par-
ticipation responsibilities, administers the risk workshop and
propels the group to achieve its goal
14. Delphi Technique uses the opinions of a select group of experts to identify risks.
Typically, these experts don't meet but respond to a survey or
inquiry instead.
15. Scenario Analysis Identifies various risks and projects the potential conse-
quences of those risks. Useful in identifying a range of po-
tential consequences and in prioritizing risks.
16. HAZOP is derived from a hazard and operability study, which is a com-
prehensive review of a process or system. A team of subject
matter experts and stakeholders identifies the risks associated
with a given process and recommends a solution.
17. SWOT Analysis this is a team approach that's useful in analyzing a new project
or product.
18. Risk Threshold when an organization decides what it's willing to sacrifice or
accept in exchange for achieving its goals
19. Checklists a tool that is easy to use in order to communicate known risks
to employees with little effort. However, they don't help to
identify unknown risks
20. Workshops allows attendees to brainstorm and assess risks in an open,
collaborative forum. This allows stakeholders to share their
, thoughts and ideas, which allows the organization to become
more aware of different perspectives, gain a fuller under-
standing of priorities, and contribute to the organization's
ability to reduce the impact of incidents that might occur
21. Risk Register A tool developed at the risk owner level that links specific
activities, processes, projects, or plans to a list of identified
risks and results of risk analysis and evaluation and that is
ultimately consolidated at the enterprise level
22. Process Flow Analysis dissects processes within the organization from input to out-
put for the purpose of improving them. When activities, their
relationship to each other, and relevant metrics are reviewed,
an organization can make operating decisions that will al-
low the process to proceed more eflciently, flexibly, quickly,
and/or cost-effectively
23. Internal & External Audits have the potential to identify both negative risks and oppor-
tunity risks (risks with a potential upside)
24. Cause & Effect Analysis identifies the possible reasons, direct and contributory, that
caused a negative event or problem
25. Fault Tree Analysis is a process that originates with an assumption about what
caused an event or a failure. Working downward from the
assumption (the top event), a diagram is used to connect the
factors that caused the failure and determine how to devise
methods to prevent similar failures in the future
26. Failure Mode and Effects uses a team of individuals to examine a process and identify
Analysis (FMEA) potential failures at each step in the process, as well as the
consequences of each failure. When failures are identified,
designs and processes can be modified
, 27. Which one of the following risk register can be used for one scenario or all of an organi-
best describes the use of a risk zation's risks.
register?
1. A risk register is used only
for one scenario.
2. A risk register is used only
to compile all of an organiza-
tion's risks.
3. A risk register can be used
for one scenario or all of an
organization's risks.
4. A risk register is used only by
risk managers.
28. CraftNoise, Inc., makes speak- Setting a risk threshold
ers for consumers' homes.
Management knows that
when a customer has to return
a defective speaker, that cus-
tomer will not return to pur-
chase another one. As a re-
sult, CraftNoise will not toler-
ate having more than 2 per-
cent of its speakers returned
because of defects. Which one
of the following is this an ex-
ample of?
1. Setting a risk threshold
2. Creating a risk register
3. Adopting a risk identifier
4. Building a fault tree
Answers
1. Strategic Risk Uncertainties associated with the organization's long-term
goals and management decisions
2. Operational Risk Uncertainties associated with the organization's procedures,
systems, and policies
3. Financial Risk Uncertainties associated with the organization's financial ac-
tivities
4. Cloud Computing enables organizations to store and share all this data through
wireless internet and networking services
5. Telematics in Automobiles creating a picture of an insured's driving habits by measuring
(IOT & Telematics) acceleration, speed, braking, and distance traveled
6. Sensors in Buildings (IOT & monitor things such as heat, moisture, noise, and air quality
Telematics)
7. Drones (IOT & Telematics) take photos or videos of diflcult-to-reach areas to assess
damage and danger
8. Smartphone and Tablets (IOT connect with others through voice, text, and video, as well as
& Telematics) provide a host of other services, including global positioning
system (GPS) tracking
9. Health Tracker (IOT & Telemat- measure heart rate, steps walked, and sleep patterns
ics)
10. Robots (IOT & Telematics) assess damage and monitor hazards and environmental con-
ditions
11. High-Definition Cameras with scan inspect buildings, bridges, and other structures for signs
Sensors (IOT & Telematics) of erosion and other risks
,12. Monte Carlo Simulation a statistical computer model that simulates the effects that
various types of uncertainty may have on a process. A comput-
er will randomly select values for each variable and generate
thousands of scenarios.
13. Facilitated Workshops a neutral party, who has no stake in the outcome or par-
ticipation responsibilities, administers the risk workshop and
propels the group to achieve its goal
14. Delphi Technique uses the opinions of a select group of experts to identify risks.
Typically, these experts don't meet but respond to a survey or
inquiry instead.
15. Scenario Analysis Identifies various risks and projects the potential conse-
quences of those risks. Useful in identifying a range of po-
tential consequences and in prioritizing risks.
16. HAZOP is derived from a hazard and operability study, which is a com-
prehensive review of a process or system. A team of subject
matter experts and stakeholders identifies the risks associated
with a given process and recommends a solution.
17. SWOT Analysis this is a team approach that's useful in analyzing a new project
or product.
18. Risk Threshold when an organization decides what it's willing to sacrifice or
accept in exchange for achieving its goals
19. Checklists a tool that is easy to use in order to communicate known risks
to employees with little effort. However, they don't help to
identify unknown risks
20. Workshops allows attendees to brainstorm and assess risks in an open,
collaborative forum. This allows stakeholders to share their
, thoughts and ideas, which allows the organization to become
more aware of different perspectives, gain a fuller under-
standing of priorities, and contribute to the organization's
ability to reduce the impact of incidents that might occur
21. Risk Register A tool developed at the risk owner level that links specific
activities, processes, projects, or plans to a list of identified
risks and results of risk analysis and evaluation and that is
ultimately consolidated at the enterprise level
22. Process Flow Analysis dissects processes within the organization from input to out-
put for the purpose of improving them. When activities, their
relationship to each other, and relevant metrics are reviewed,
an organization can make operating decisions that will al-
low the process to proceed more eflciently, flexibly, quickly,
and/or cost-effectively
23. Internal & External Audits have the potential to identify both negative risks and oppor-
tunity risks (risks with a potential upside)
24. Cause & Effect Analysis identifies the possible reasons, direct and contributory, that
caused a negative event or problem
25. Fault Tree Analysis is a process that originates with an assumption about what
caused an event or a failure. Working downward from the
assumption (the top event), a diagram is used to connect the
factors that caused the failure and determine how to devise
methods to prevent similar failures in the future
26. Failure Mode and Effects uses a team of individuals to examine a process and identify
Analysis (FMEA) potential failures at each step in the process, as well as the
consequences of each failure. When failures are identified,
designs and processes can be modified
, 27. Which one of the following risk register can be used for one scenario or all of an organi-
best describes the use of a risk zation's risks.
register?
1. A risk register is used only
for one scenario.
2. A risk register is used only
to compile all of an organiza-
tion's risks.
3. A risk register can be used
for one scenario or all of an
organization's risks.
4. A risk register is used only by
risk managers.
28. CraftNoise, Inc., makes speak- Setting a risk threshold
ers for consumers' homes.
Management knows that
when a customer has to return
a defective speaker, that cus-
tomer will not return to pur-
chase another one. As a re-
sult, CraftNoise will not toler-
ate having more than 2 per-
cent of its speakers returned
because of defects. Which one
of the following is this an ex-
ample of?
1. Setting a risk threshold
2. Creating a risk register
3. Adopting a risk identifier
4. Building a fault tree
