ARM 401 Exam Practice Rated 100% Correct 2023
A risk map showing a large difference between inherent and residual risk
indicates which one of the following?
A. The risk is within the organization's risk appetite
B. The current risk treatment is ineffective
C. The current risk treatment is effective
D. The risk does not need to be treated
C
Lucas, a risk professional for Jones Incorporated, recently met with experts from
the utility industry to discuss the potential loss of supply and risks to the
infrastructure. Lucas must now decide which risks, and proposed treatments,
need to be communicated to the board of Jones Incorporated. Lucas should
make this decision based on
A. The supply source involved.
B. The organization's risk appetite and tolerance levels.
C. Whether the risk in natural or man-made.
D. Whether any government regulations are involved or not.
B
SoCal Movie Company produces movies at a studio in Southern California. The
risk manager decided to identify the range of potential consequences associated
with various risks that the company faces. For example, if a severe earthquake
occurred while the company was filming a movie, there could be deaths and
injuries, destruction of movie sets, delays in production, costs associated with
filming at an alternative location, and loss of reputation and good will. The type of
analysis performed by the risk manager is called
A. SWOT analysis.
B. Scenario analysis.
C. Sensitivity analysis.
D. HAZOP analysis.
B
Insurance Company (IC) sells its coverages through independent insurance
agents. Independent agents represent several insurance companies. Tom, the
president of IC, has learned that the independent agent who is the highest
producer for IC is considering selling his agency. IC is considering acquiring the
agency since Tom is concerned that if the agency is sold, IC may lose a
substantial amount of business. Tom asked IC's risk manager to analyze the
prospective purchase. The analysis revealed that the acquisition would likely
secure most of IC's book of business with the agency but also revealed local
competitors that would try to place the business as well. In addition, the analysis
revealed the opportunity for IC to move some accounts currently placed with
other insurers over to IC. Also, it was learned that a competitor expressed an
interest in the agency acquisition. The analysis performed by the risk manager is
a form of
A. Decision tree analysis.
B. HAZOP analysis.
,C. Risk map analysis.
D. SWOT analysis.
D
Murray Trucking is interested in evaluating which risk factors are most likely to
lead to the most costly accidents. They are evaluating risk factors such as speed,
weather conditions, driver experience, distance traveled, and gross vehicle
weight. Which one of the following statistical measurements would be useful for
the risk manager when calculating the probability of the different risk factors
causing severe accidents?
A. Telematics
B. Inverse covariance
C. Variance
D. Monte Carlo simulation
C
Blithe Manufacturing has experienced a drop in market share. The marketing
department has come up with a way to differentiate their product in order to
regain market share. Blithe has assembled a team of individuals representing
different organizational functions to analyze both internal and external factors of
the new product and decide whether or not it is feasible. Which one of the
following team approaches to risk identification is Blithe using?
A. Delphi technique
B. HAZOP workshop
C. SWOT analysis
D. Scenario analysis
C
William is a project manager for Parker International. He has been assigned a key
project with a short deadline. William realizes that this project is going to require
revising the job duties of some individuals and a collaborative effort from of all
team members. When revising job duties, William should do which one of the
following?
A. Overload some individuals with more work than others
B. Try to enrich individuals' work rather than merely expand it
C. Rely on the most senior individuals to take on additional duties
D. Focus on the individuals' personality rather than results
B
Shelton Manufacturing executives are growing increasingly concerned about
wildfires and the potential effects on supply chain management. As the risk
professional, Carla has been asked to meet with experts on the subject and report
back to the executive team. Which one of the following should Carla do before
meeting with external wildfire experts?
A. Carla should speak with internal subject-matter experts in hopes that she can
avoid needing the external wildfire experts.
B. Carla should research the field and get a working understanding of wildfires.
C. Carla should solicit questions from internal experts and submit them to the
external wildfire experts.
,D. Carla should try to learn as much as possible about wildfires, so she can
impress the wildfire experts.
B
An organization practicing holistic risk management would assess the cost of
raw materials and foreign exchange risk under which one of the following
quadrants of risk?
A. Strategic risk
B. Financial risk
C. Operational risk
D. Hazard risk
B
Risk maps differ from other risk assessment tools and techniques in which one of
the following ways?
A. Risk maps dissect processes within the organization from input to output for
the purpose of improving them.
B. Risk maps identify, prioritize, and quantify risks in a two-dimensional pictorial
that illustrates frequency and severity on vertical and horizontal axes.
C. Risk maps have the potential to identify both negative risks and opportunity
risks.
D. Risk maps are able to quickly explore a vast number of possible outcomes
based on large datasets.
B
As a best practice, a risk register should be an interactive computer system.
Which one of the following individuals should be responsible for continually
updating risk information?
A. Customer
B. Risk management professional
C. Risk owner
D. Chief executive officer
C
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 is called a
A. Risk report.
B. Risk map.
C. Risk matrix.
D. Risk register.
D
Which one of the following risk assessment tools has the potential to identify
both negative risks and opportunity risks?
A. Risk maps
B. Audits
C. Cause and effect analysis
D. Failure mode and effects analysis
B
, Emma is a risk management professional at a chemical engineering organization.
A new process is being designed and Emma has been told that all risks must be
identified and eliminated during the design stage. Emma is a risk management
professional, but not a chemical engineering expert. She has assembled a team
of engineering experts and stakeholders to identify the risk associated with the
process by subdividing the process into components and reviewing each
component and then recommend solutions. Which one of the following team
approaches to risk identification has Emma chosen?
A. Delphi technique
B. SWOT analysis
C. Scenario analysis
D. HAZOP approach
D
Cotton Products Company manufactures cotton clothing, towels, sheets, and
other cotton products. All production takes place at one large multi-acre
production facility. The risk manager of Cotton Products Company called a
meeting attended by her staff, the plant foreman, the plant safety engineer, and
the head of operations. She told the group that she wanted to analyze one
problem-the top event-a catastrophic fire at the production facility. The group
discussed all the causes of failure and factors that could contribute to the top
event. The causes of the -top event- were listed, and methods of reducing the
likelihood and consequences of the event were examined. The technique the risk
manager employed is called
A. Failure mode and effects analysis (FMEA).
B. SWOT analysis.
C. Scenario analysis.
D. Fault tree analysis (FTA).
D
Home Appliance Company has decided to change its production method.
Previously, small teams of workers assembled washers, dryers, and dishwashers.
Under the new production method, an assembly-line will be used, with some
functions performed by robotics. Before making the change, Home Appliance
Company has created a team of experts from company personnel to identify all of
the risks inherent in the new production method and to recommend measures to
address these risks. The team will assemble in a facilitated workshop and follow
these steps:
Divide the production method into components
Review each component to identify risk
Identify causes and potential outcomes for each risk
Develop a solution for each risk.
This team approach is risk identification is called a
A. SWOT (strengths, weaknesses, opportunities, threats) analysis.
B. Delphi technique.
C. Facilitated workshop.
D. Hazard and operability (HAZOP) study.
D
A risk map showing a large difference between inherent and residual risk
indicates which one of the following?
A. The risk is within the organization's risk appetite
B. The current risk treatment is ineffective
C. The current risk treatment is effective
D. The risk does not need to be treated
C
Lucas, a risk professional for Jones Incorporated, recently met with experts from
the utility industry to discuss the potential loss of supply and risks to the
infrastructure. Lucas must now decide which risks, and proposed treatments,
need to be communicated to the board of Jones Incorporated. Lucas should
make this decision based on
A. The supply source involved.
B. The organization's risk appetite and tolerance levels.
C. Whether the risk in natural or man-made.
D. Whether any government regulations are involved or not.
B
SoCal Movie Company produces movies at a studio in Southern California. The
risk manager decided to identify the range of potential consequences associated
with various risks that the company faces. For example, if a severe earthquake
occurred while the company was filming a movie, there could be deaths and
injuries, destruction of movie sets, delays in production, costs associated with
filming at an alternative location, and loss of reputation and good will. The type of
analysis performed by the risk manager is called
A. SWOT analysis.
B. Scenario analysis.
C. Sensitivity analysis.
D. HAZOP analysis.
B
Insurance Company (IC) sells its coverages through independent insurance
agents. Independent agents represent several insurance companies. Tom, the
president of IC, has learned that the independent agent who is the highest
producer for IC is considering selling his agency. IC is considering acquiring the
agency since Tom is concerned that if the agency is sold, IC may lose a
substantial amount of business. Tom asked IC's risk manager to analyze the
prospective purchase. The analysis revealed that the acquisition would likely
secure most of IC's book of business with the agency but also revealed local
competitors that would try to place the business as well. In addition, the analysis
revealed the opportunity for IC to move some accounts currently placed with
other insurers over to IC. Also, it was learned that a competitor expressed an
interest in the agency acquisition. The analysis performed by the risk manager is
a form of
A. Decision tree analysis.
B. HAZOP analysis.
,C. Risk map analysis.
D. SWOT analysis.
D
Murray Trucking is interested in evaluating which risk factors are most likely to
lead to the most costly accidents. They are evaluating risk factors such as speed,
weather conditions, driver experience, distance traveled, and gross vehicle
weight. Which one of the following statistical measurements would be useful for
the risk manager when calculating the probability of the different risk factors
causing severe accidents?
A. Telematics
B. Inverse covariance
C. Variance
D. Monte Carlo simulation
C
Blithe Manufacturing has experienced a drop in market share. The marketing
department has come up with a way to differentiate their product in order to
regain market share. Blithe has assembled a team of individuals representing
different organizational functions to analyze both internal and external factors of
the new product and decide whether or not it is feasible. Which one of the
following team approaches to risk identification is Blithe using?
A. Delphi technique
B. HAZOP workshop
C. SWOT analysis
D. Scenario analysis
C
William is a project manager for Parker International. He has been assigned a key
project with a short deadline. William realizes that this project is going to require
revising the job duties of some individuals and a collaborative effort from of all
team members. When revising job duties, William should do which one of the
following?
A. Overload some individuals with more work than others
B. Try to enrich individuals' work rather than merely expand it
C. Rely on the most senior individuals to take on additional duties
D. Focus on the individuals' personality rather than results
B
Shelton Manufacturing executives are growing increasingly concerned about
wildfires and the potential effects on supply chain management. As the risk
professional, Carla has been asked to meet with experts on the subject and report
back to the executive team. Which one of the following should Carla do before
meeting with external wildfire experts?
A. Carla should speak with internal subject-matter experts in hopes that she can
avoid needing the external wildfire experts.
B. Carla should research the field and get a working understanding of wildfires.
C. Carla should solicit questions from internal experts and submit them to the
external wildfire experts.
,D. Carla should try to learn as much as possible about wildfires, so she can
impress the wildfire experts.
B
An organization practicing holistic risk management would assess the cost of
raw materials and foreign exchange risk under which one of the following
quadrants of risk?
A. Strategic risk
B. Financial risk
C. Operational risk
D. Hazard risk
B
Risk maps differ from other risk assessment tools and techniques in which one of
the following ways?
A. Risk maps dissect processes within the organization from input to output for
the purpose of improving them.
B. Risk maps identify, prioritize, and quantify risks in a two-dimensional pictorial
that illustrates frequency and severity on vertical and horizontal axes.
C. Risk maps have the potential to identify both negative risks and opportunity
risks.
D. Risk maps are able to quickly explore a vast number of possible outcomes
based on large datasets.
B
As a best practice, a risk register should be an interactive computer system.
Which one of the following individuals should be responsible for continually
updating risk information?
A. Customer
B. Risk management professional
C. Risk owner
D. Chief executive officer
C
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 is called a
A. Risk report.
B. Risk map.
C. Risk matrix.
D. Risk register.
D
Which one of the following risk assessment tools has the potential to identify
both negative risks and opportunity risks?
A. Risk maps
B. Audits
C. Cause and effect analysis
D. Failure mode and effects analysis
B
, Emma is a risk management professional at a chemical engineering organization.
A new process is being designed and Emma has been told that all risks must be
identified and eliminated during the design stage. Emma is a risk management
professional, but not a chemical engineering expert. She has assembled a team
of engineering experts and stakeholders to identify the risk associated with the
process by subdividing the process into components and reviewing each
component and then recommend solutions. Which one of the following team
approaches to risk identification has Emma chosen?
A. Delphi technique
B. SWOT analysis
C. Scenario analysis
D. HAZOP approach
D
Cotton Products Company manufactures cotton clothing, towels, sheets, and
other cotton products. All production takes place at one large multi-acre
production facility. The risk manager of Cotton Products Company called a
meeting attended by her staff, the plant foreman, the plant safety engineer, and
the head of operations. She told the group that she wanted to analyze one
problem-the top event-a catastrophic fire at the production facility. The group
discussed all the causes of failure and factors that could contribute to the top
event. The causes of the -top event- were listed, and methods of reducing the
likelihood and consequences of the event were examined. The technique the risk
manager employed is called
A. Failure mode and effects analysis (FMEA).
B. SWOT analysis.
C. Scenario analysis.
D. Fault tree analysis (FTA).
D
Home Appliance Company has decided to change its production method.
Previously, small teams of workers assembled washers, dryers, and dishwashers.
Under the new production method, an assembly-line will be used, with some
functions performed by robotics. Before making the change, Home Appliance
Company has created a team of experts from company personnel to identify all of
the risks inherent in the new production method and to recommend measures to
address these risks. The team will assemble in a facilitated workshop and follow
these steps:
Divide the production method into components
Review each component to identify risk
Identify causes and potential outcomes for each risk
Develop a solution for each risk.
This team approach is risk identification is called a
A. SWOT (strengths, weaknesses, opportunities, threats) analysis.
B. Delphi technique.
C. Facilitated workshop.
D. Hazard and operability (HAZOP) study.
D
