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ARM 401 – Questions And Complete Answers (Pass!)
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ARM 401 – Questions And Complete Answers (Pass!)
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ARM 401 – Questions And Complete Answers (Pass!)Certain types of property losses such as drought, flood, and earthquake are
referred to as natural because Right Ans - C. It is beyond human control.
A new coffee company based in Indonesia has found a demand for its product
in North America. As such, it has established three locations in the United
States and one in Canada. The Board of Directors has concerns about the 'farm
to fork' concept being it is sending product many miles from Indonesia to
North America. As a result, the board has highlighted a few concerns that
could be showstoppers for a successful North American product launch. They
have determined that their biggest internal exposure is employment issues as
North American companies function differently than those in Indonesia. On
the external front, they have circled political/regulatory risk as the biggest
hurdle to a smooth operation. What are two mitigation techniques that would
help quell their concerns on having a smooth supply chain management
system to North America? Right Ans - D. Educate staff on human resource
management and monitor the governmental environments where the
businesses operate.
Determining the probability that a certain event will occur can be an
important part of exposure analysis in the risk management process. Which
one of the following is the term used for probability that is developed based
on actual experience? Right Ans - A. Empirical probability
Mike and Jack are research chemists at Wentworth Pharmaceutical. They are
working on a top-secret project, a new arthritis drug. On the evening of the
day that Mike and Jack made a major breakthrough on the drug, Jack saw this
posting on a public bulletin board: "Buy Wentworth Pharma stock...major
good news coming soon on arthritis drug. You heard it here first." The post
was attributed to "DrugGuy201." Jack knew that Mike was the only other
person who could have made the post. He asked Wentworth's compliance
department to review the posting. After the investigation, Mike was formally
reprimanded by the company and warned that further infractions would
result in dismissal. Mike's offense in this case was Right Ans - B. Revealing
intellectual property.
,One of the characteristics of individuals and groups of individuals that affects
susceptibility to injury or death caused by a building fire is Right Ans - D.
Age.
The descriptive approach is applied Right Ans - C. When an insurer or risk
manager has a specific problem.
Which one of the following statements is true regarding sources of risk
affecting property exposures? Right Ans - C. Risk control techniques can
usually manage the likelihood and consequences of human risk sources to
some extent.
A predictive model was developed for Shelton Manufacturing to determine the
likelihood of current and future employees suffering from hearing loss. The
predictive model was applied to Shelton Manufacturing data of 200
employees, 10 of whom developed hearing loss in the past year. Based on the
numbers shown in the performance metric below, what is the accuracy of the
hearing loss predictive model?
Predicted No Predicted Yes. = Total (200 Employees)
Actual NO: 178 12 190
Actual Yes: 2 8 10 Right Ans - C. 0.93
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? Right Ans - B. The $50,000 property policy
deductible
One category of operational risk includes procedures and practices
organizations use to conduct their business activities. This category is
Right Ans - D. Process risk.
Economic capital attempts to quantify the various risks faced by an
organization. One such risk includes such things as a flawed production
, process at a company or failed internal processes because of data system
problems. This type of risk is called Right Ans - B. Operational risk.
Which one of the following statements about the balance sheet is correct?
Right Ans - A. Net worth is positive whenever the value of assets exceeds the
value of liabilities and negative if the value of liabilities exceeds the value of
assets.
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? Right Ans - B. Variance
Technological advancements have led to access to unprecedented volumes
and types of data. Social media posts are an example of which one of the
following types of data? Right Ans - B. External unstructured data
A risk manager's goal when using a social network is Right Ans - D. To
reach as many end users as possible with the minimum amount of effort.
An analysis that identifies mathematical patterns in past losses and then
projects these patterns into the future is Right Ans - A. Trend analysis.
A risk management professional should ensure that an organizational risk
register has which one of the following characteristics? Right Ans - C.
Provides interactive use for risk owners
Data analytics is especially useful for Right Ans - .
B. Unstructured data.
Malvern Electronics (Malvern) is a home entertainment equipment retailer
that prides itself on its line of televisions. Malvern carries a specialty line of
high definition televisions made by XYZ TV (XYZ). Many customers come in
requesting televisions made by XYZ. Malvern benefits from this relationship
by offering set up services and maintenance contracts, and XYZ's revenue is
largely based on sales from Malvern's retail stores. If a power/interest matrix
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