A.R.M. 400 EXAM PRACTICE 240

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A.R.M. 400 EXAM PRACTICE | 240

QUESTIONS WITH 100% CORRECT

ANSWERS | VERIFIED | 91 PAGES

Question :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?

• Seek feedback from stakeholders
• Stay focused on the organization's objectives
• Define the organization's risk appetite
• Enhance stakeholders' confidence in the process

Correct answer: D

Question :Which of the following risk management program

goals is an essential goal for all public entities?

• Earning stability
• Continuity of operations
• Growth
• Survival

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Correct answer: B

Question :The traditional definition of risk management

reflects the traditional concept of risk as

• Both positive and negative.
• Negative.
• Uncontrollable.
• Strategic.

Correct answer: B

Question :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?

• The two new tr

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Correct answer: D

Question :Which one of the following statements is true

regarding the basic measures that apply to risk management?

• Consequences measure the degree to which an occurrence

could positively or negatively affect an organization.

• Hedging is a risk management strategy that can reduce the

risk of correlation.

• Risk increases as volatility decreases.
• Longer time horizons are generally less risky that shorter

ones.

Correct answer: A

Question :Which one of the following provides a measure of

the maximum potential damage associated with an occurrence?

• Exposure
• Duration
• Underwriting risk
• Maximum probable loss

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Correct answer: A

Question :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?

• Determine the organization's risk appetite
• Identify all of

Correct answer: A

Question :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.
• Derivative risk.
• Compliance risk.