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ARM 400 NEWEST EXAM PRACTICE | 250+ ACTUAL QUESTIONS AND ANSWERS VERIFIED BY EXPERT | LATEST UPDATE 2024

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ARM 400 NEWEST EXAM PRACTICE | 250+ ACTUAL QUESTIONS AND ANSWERS VERIFIED BY EXPERT | LATEST UPDATE 2024

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  • May 31, 2024
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  • 2023/2024
  • Exam (elaborations)
  • Questions & answers

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  • ARM 400
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ARM 400 NEWEST EXAM PRACTICE | 250+ ACTUAL
QUESTIONS AND ANSWERS VERIFIED BY EXPERT | LATEST
UPDATE 2024
Question 1

Which of the following is the most effective risk control technique for
addressing a high-frequency, low-severity loss exposure?

a. Loss prevention: This technique aims to reduce the frequency of loss, such as
implementing safety training programs to prevent workplace accidents.

b. Loss reduction: This technique aims to reduce the severity of losses that do
occur, such as installing fire sprinklers to minimize fire damage.

c. Risk transfer: This involves transferring the risk to another party, such as
purchasing insurance.

d. Risk avoidance: This involves eliminating the risk entirely, such as
discontinuing a hazardous activity.

Answer: a. Loss prevention

Question 2

In the context of risk management, what does the term "loss severity" refer
to?

a. The probability that a loss will occur.

b. The total number of losses that occur in a given period.

c. The financial impact or cost of a loss when it occurs.

d. The number of times a particular type of loss occurs.

Answer: c. The financial impact or cost of a loss when it occurs.

Question 3

,What is the primary purpose of risk financing in risk management?

a. To identify potential risks that an organization may face.

b. To ensure that funds are available to cover losses when they occur.

c. To eliminate all risks faced by an organization.

d. To reduce the frequency of losses through preventive measures.

Answer: b. To ensure that funds are available to cover losses when they occur.

Question 4

Which risk management technique involves sharing the financial
consequences of a risk among multiple parties?

a. Risk retention

b. Risk transfer

c. Risk avoidance

d. Risk reduction

Answer: b. Risk transfer

Question 5

What is the main advantage of using a risk retention approach in risk
management?

a. It allows an organization to save on the cost of insurance premiums.

b. It eliminates the possibility of a loss occurring.

c. It transfers the risk to another party, reducing the organization’s liability.

d. It increases the frequency of losses, making them more predictable.

Answer: a. It allows an organization to save on the cost of insurance
premiums.

,Question 6

What is a key characteristic of a "speculative risk"?

a. It involves the possibility of both a loss and a gain.

b. It only involves the possibility of a loss.

c. It is always insurable.

d. It is always avoidable.

Answer: a. It involves the possibility of both a loss and a gain.

Question 7

In risk management, what does the term "loss frequency" refer to?

a. The number of losses that occur in a given period.

b. The financial impact of a loss.

c. The total cost of all losses in a given period.

d. The severity of losses that occur.

Answer: a. The number of losses that occur in a given period.

Question 8

Which of the following is an example of a pure risk?

a. Natural disasters such as earthquakes and floods.

b. Stock market investments.

c. Starting a new business.

d. Developing a new product.

Answer: a. Natural disasters such as earthquakes and floods.

, Question 9

What is the purpose of risk identification in the risk management process?

a. To evaluate the potential impact of identified risks.

b. To recognize and list all potential risks that could affect the organization.

c. To transfer risks to another party.

d. To finance risks through insurance.

Answer: b. To recognize and list all potential risks that could affect the
organization.

Question 10

Which risk management technique aims to reduce the likelihood of a loss
occurring?

a. Risk retention

b. Risk transfer

c. Loss prevention

d. Loss reduction

Answer: c. Loss prevention

Question 11

Which of the following statements best describes "risk assessment" in the
context of risk management?

a. The process of transferring risks to another party.

b. The process of eliminating all risks faced by an organization.

c. The process of analyzing the potential impact and likelihood of identified
risks.

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