A.R.M. 400 EXAM PRACTICE
QUESTIONS AND ANSWER S
Question 1: According to the law of large numbers, as the
number of exposure units insured increases,
CORRECT ANSWER : The relative accuracy of predictions
about future losses increases
Question 2: The fundamental purpose of a risk management
framework is to
CORRECT ANSWER : Integrate risk management
throughout the organization
Question 3: Which one of the following provides a measure
of the maximum potential damage associated with an occurrence?
CORRECT ANSWER : Exposure
Question 4: Aligning risks with the organization's risk
appetite defines
CORRECT ANSWE R: Tolerable uncertainty
Question 5: An organization must meet the standard of care
that it owes to others in order to ensure that
CORRECT ANSWER : Legal obligations are satisfied
Question 6: 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?
CORRECT ANSWER : Response
Question 7: 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?
CORRECT ANSWER : The new production machine
Question 8: 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
CORRECT ANSWER : Cultivate two-way communication
Question 9: Which one of the following risk management
objectives is critical for a manufacturer seeking new capital from investors, stockholders, and creditors?
CORRECT ANSWER : Reduce the deterrent effects of
hazard risks
Question 10: Which one of the following is a tool that can be
used by fraud investigators to compare documents and analyze notes?
CORRECT ANSWER : Text mining
Question 11: 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?
CORRECT ANSWER : Set a clear communication objective
Question 12: 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
CORRECT ANSWER : Loan defaults are likely to be highly
correlated
Question 13: Which one of the following statements is true
with regard to preventative analytics?
CORRECT ANSWER : Preventative analytics uses smart
products and data analytics to identify root loss causes and their implications.