ARM 401 Exam Practice Rated 100% Correct 2023

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 SE Industries has identified windstorm as a risk. The risk manager has assembled a team to project the potential consequences of windstorm. The team includes individuals from various functions within the organization. Which one of the following team approaches to risk identification is SE Industries using? A. Delphi technique B. Scenario analysis C. SWOT analysis D. HAZOP B The risk management department at Computer Hardware Company uses risk maps to graph and analyze the risks faced by the company. One area of special concern to the risk management team is the difference between residual risk and optimum risk. This difference represents A. The risk that cannot be altered and is retained by the firm. B. The risk treatment opportunity to further reduce risk. C. The risk that is handled, by default, through avoidance. D. The potential risk that the organization does not currently face, but could face if conditions change. B Which one of the following occurs when individuals, departments, or teams from different areas work together to accomplish a shared organizational goal? A. Collaboration B. Coordination C. Cooperation D. Communication A Which one of the following is a technique used to provide a visual perspective of an organization's risks and to prioritize those risks? A. Risk mapping B. Risk quadrants C. Risk register D. SWOT analysis A James is the risk manager for a large manufacturing organization with six locations. Each location has a plant manager who is responsible for the operation of that location. James feels that the plant managers are in the best position to identify and measure risk at their locations. He wants them to own the risk. However, he is looking for a tool that will allow him to prioritize risk according to the potential effect on the organization. James wants an interactive tool that will adequately identify the organization's risks, and allow them to be measured based on likelihood and the level of risk to the organization. Which one of the following is the most appropriate tool for James? A. SWOT analysis B. Risk map C. Organizational risk register D. Facilitated workshop C Which one of the following is a major benefit that blockchain technology provides to holistic risk management? A. Because of their security, blockchains can eliminate the need to verify the accuracy of risk management data. B. Blockchain technology allows organizations to share data through wireless internet and networking services. C. Blockchains can monitor things such as heat, moisture, noise, and air quality. D. Blockchain technology can monitor driving habits by measuring acceleration, speed, braking, and distance traveled. A Which one of the following statements is true regarding the use of risk registers with scenario models? A. The risk manager should complete a risk register for each location of the organization. B. An interactive computer system should be used for risk registers so they can be updated once a year. C. A risk register should record the likelihood of a scenario along with the consequences of associated risks. D. The likelihood of a risk register's scenario should not vary significantly among locations of the organization. C Risk management professionals can use risk mapping to identify inherent risk and residual (current) level of risk. Inherent risk is important because the difference between inherent and residual risk provides a measure of: A. The effectiveness of the current risk treatment. B. The necessity of risk financing. C. Speculative risk. D. Volatility. A Northeast Urban Properties owns and operates office buildings in New York, Boston, and Philadelphia. The risk manager decided to examine the impact of potential terrorist attacks on each building. For example, for the Philadelphia building, the risk manager examined attacks at three levels: scare (e.g. suspicious package), minor explosion or gas attack, and large-scale attack. For each level, the risk manager listed the risk owners, the risk quadrants impacted, the likelihood of attack, the consequence, the risk level, and the risk control measures that needed to be implemented. This information was summarized in a one-page chart. The chart the risk manager prepared is a A. Risk report with warning color code. B. Risk matrix with value at risk. C. Risk map with simulation. D. Risk register with scenario model. D Erin is a project manager at Shelton Manufacturing. She is responsible for a major project that will require the collaboration of many different groups. Erin needs to motivate everyone from the sales force and support team, to the suppliers, production lines, and logistics teams to achieve the goal by July 1st. Which one of the following is key in order for Erin to achieve this collaboration? A. Advising each group of the method that she wants them to use to complete their task. B. Putting the desired result at the forefront and making sure that everyone knows what group success looks like. C. Encouraging group members to ignore obstacles and keep moving forward. D. Setting individuals goals for each stakeholder involved in the project. B The use of risk quadrants to identify and categorize risk provides a framework for A. Positive risk identification. B. Holistic risk identification. C. Emerging risk identification. D. Environmental risk identification. B Murray Supply Company has a commercial property policy with a $500,000 building limit and a $50,000 deductible. A tornado passed through the area and damaged one of the company's warehouses. The claims adjuster advised the risk manager that the amount of damage to the warehouse was $20,000. Which one of the following represents Murray Supply Company's risk threshold for a property loss? A. The $20,000 property loss B. The $50,000 property policy deductible C. The $500,000 building limit D. The $500,000 building limit less the $20,000 loss B In risk mapping, which one of the following represents the level of risk that is within an organization's risk appetite? A. Residual risk B. Inherent risk C. Optimum risk D. Current risk C Gaining a holistic perspective requires A. Developing a thorough understanding of each unit's role and how it supports or depends on other units and stakeholders. B. Becoming an expert on the work that every stakeholder performs. C. Designating one individual to be responsible for initiating meetings and dominating conversations. D. Encouraging individuals to resolve issues within their own work units. A After a month in which three employees were seriously injured at company paper mills, Ashley, the risk manager of Bright White Paper Company, wanted some answers about the causes of employee injuries. Ashley independently contacted the plant manager and foreman at each of the company's plants. She asked each