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ARM 401 EXAM – 251 QUESTIONS WITH ACCURATE ANSWERS
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ARM 401 EXAM – 251 QUESTIONS WITHACCURATE ANSWERS
holistic approach to managing risk - --broader in scope, managing all areas
of the business, not just hazard risks
-encompasses the analysis and predictability of business processes and
organizational decisions
-mandates the collaboration of internal and external stakeholders to identify,
assess, and treat risks
-involves looking at what might be gained from decisions or actions
-can uncover inconsistencies in how a company managers loss retention
-can help orgs better absorb losses
-strategic risk - --uncertainties associated with the organization's long-term
goals and management decisions
-may carry a greater risk dynamic, positive or negative, that the other
categories
-operational risk - -uncertainties associated with the organization's
procedures, systems, and policies
-financial risk - -uncertainties associated with the organization's financial
activities
-today's conception of risk - -incorporates the idea that taking risks is
fundamentally necessary for growth
-predictive modeling - -can empower decision making by uncovering
previously imperceptible risk factors
-Internet of Things - -network of devices that sense their environment,
process data, and share it instantly
-cloud computing - -enables orgs to store and share data through wireless
internet and networking services
-blockchain technology - --facilitates secure transactions without the need
for a third party
-protects against cyber threats
-eliminates the need to verify the accuracy of risk management data
-lets risk managers spend more time on forward-looking functions
-what fuels the future of holistic risk management? - -the capture, storage,
and analysis of data
, -covariance - --the measure of how two random risk variables will change in
relation to each other
-calculates correlation between the variables
-variance - --the spread of the data set, or how far apart the numbers are in
relation to the mean
-team approaches to risk identification - -1. facilitated workshops
2. Delphi technique
3. scenario analysis
4. HAZOP
5. SWOT
-why is it important to take a team-oriented approach to identifying risks? -
--provide diverse perspectives on risks
-can reveal how risks are connected across an org, reducing the likelihood
for risks to be overlooked
-facilitated workshops - --a neutral party, who has no stake in the outcome,
administers the risk workshop and propels the group to achieve its goal
-wise to include people from diverse groups
-can be used for a specific project or process, as well as to identify those
risks that affect overall org objectives
-if using to identify all org risks: facilitator must be skilled in risk ID and
management as well as group communication and be prepared for a long-
term project
-delphi technique - --uses the opinions of a select group of experts to
identify risks
-typically they don't meet but respond to a survey or inquiry instead
-question-and-response cycle: answer question anonymously, see results,
answer same question until reach consensus
-benefits: cost-effective, eliminates group bias and encourages honesty by
anonymity
-disadvantages: experts' opinions may be limited to their current thinking on
a subject
-scenario analysis - --identifies risks and predicts the potential
consequences of those specific risks
-can help identify a range of potential consequences and prioritize risks
-benefit is it brings all the concerns of different parts of the org together so
they can be addressed as a whole
-should assemble an internal cross-functional team to get a multidimensional
view
-disadvantage: may be limited by the imagination and brainstorming
capabilities of the team selected
, -HAZOP - --a comprehensive 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
-primarily used to design complex, scientific systems
-used when virtually all risks must be eliminated
-steps in HAZOP process - -1. subdivides the project or system design into
small components
2. reviews each component to identify risks
3. identifies the cause and potential outcomes for each risk
4. develops a solution for each risk
5. ensures that solutions work and reevaluates as necessary
-SWOT Analysis - --team approach that's useful in analyzing a new project
or product
-strengths and weaknesses are internal environmental factors
-opportunities and threats are external environmental factors
-a goal is necessary to keep the SOT analysis from becoming too general or
failing to provide actionable info
-concludes with a "go" or "no go" recommendation
-assessing risks of an organization - --unique qualities of org
-industry it's in
-internal/external factors
-upstream and downstream external factors (upstream: suppliers and
manufacturers; downstream: distribution channels and consumer demands)
-traditional risk assessment tools and techniques - -1. risk thresholds
2. checklists
3. workshops
4. risk registers and risk maps
5. process flow analysis
6. audits
7. cause and effect analysis
8. fault tree analysis
9. failure mode and effects analysis
-risk thresholds - --when an org must decide what it's willing to sacrifice or
accept in exchange for achieving its goals
-checklists - --easy to use and communicate known risks to employees with
little efforts
-don't help identify unknown risks
, -workshops - --allows attendees to brainstorm and assess risks in an open,
collaborative forum
-gives more perspectives
-downside is the potential for senior management to influence the flow of
ideas from stakeholders; some people conform
-risk registers and risk maps - --used to sort and rank a large number of
risks
-risk register: a ledger of identified risks that're recorded in a table in a
document; data in this is specific to the org
-risk map: a graphic diagram showing the components of a the register;
identify, prioritize, and quantify risks in a two dimensional pictorial that
illustrates frequency and severity on vertical and horizontal axes
-process flow analysis - --dissects processes within the org from input to
output for the purpose of improving them
-audits - --can identify both negative risks and opportunity risks
-cause and effect analysis - --looks backward through a defective process
and identifies the possible reasons, direct and contributory, that caused a
negative event or problem
-impossible to solve or prevent a problem without finding the root cause
-combines brainstorming, communications, and mapping to find the caused
of a problem and the solution
-fault tree analysis - --a process that originates with an assumption about
what caused an event or failure
-work downward from assumption then used a diagram to connector the
factors that caused the failure and determine how to devise methods to
prevent similar failures in the future
-Failure Model and Effects Analysis (FMEA) - --uses a team of individuals to
examine a process and identify potential failures at each step in the process,
as well as the consequences of each failure
-emerging risk assessment tolls and techniques - --emerging tech and
smart devices provide real-time data
-radio frequency identification, seniors, AI, computer vision
-don't replace traditional methods but do overcome some of the
shortcomings of the tradition methods
-risk registers - --a tool developed at the risk owner level that links specific
activities, processes, projects, or plans to a list of identified risks and results
or risk analysis and evaluation and that is ultimately consolidated at the
enterprise level
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