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ARM 401 Exam: Questions/Answers (Correct & Verified)
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ARM 401 Exam: Questions/Answers (Correct & Verified)
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ARM 401 Exam: Questions/Answers (Correct &Verified)
What is the premise of holistic risk management? Right Ans - The premise
of holistic risk management is that all business decisions and operations carry
some risk, so organizations should look beyond hazards to assess exposures
from the other three quadrants of risk: strategic risk, operational risk, and
financial risk.
How can organizations benefit from using the data they collect to perform
predictive modeling and manage risk? Right Ans - Some benefits may
include empowering decision making by uncovering risks that are not yet
known or predicting potential outcomes of business decisions.
Explain why it is helpful to include representatives from diverse groups in an
organization during team workshops to identify risks Right Ans - It is
helpful to include representatives from diverse groups in an organization
during team workshops because discussion of the combined and cascading eff
ects of risks provides valuable information on risk level and priority. Such
discussion can identify opportunity risks as well as risks with potentially
negative consequences
Describe the Delphi technique. Right Ans - The Delphi technique uses the
opinions of a select group of experts to identify risks. Typically, these experts
do not meet but respond to a survey or inquiry. The standard Delphi
technique involves submitting two rounds of queries to the selected experts.
First, each expert responds to a question, and the combined answers, which
remain anonymous, are presented to the group. The same question is then
posed again to the experts, who are instructed to consider revising their
responses based on the results that were reported to the group. This
question-and-response cycle continues for a predetermined number of rounds
or until a consensus is reached.
Discuss the advantages and disadvantages of scenario analysis in identifying
risks. Right Ans - Scenario analysis is useful in identifying a range of
potential consequences and in prioritizing risks. An internal cross-functional
team at an organization can implement the technique to obtain a
multidimensional view of the potential consequences of a risk. However, a
, potential disadvantage is that the risk identification process may be limited by
the imagination and brainstorming capabilities of the team selected. This
could lead to overlooking key risks or consequences of risks. Although cross-
functional teams reduce these disadvantages, they do not eliminate them.
Identify the steps in a hazard and operability, or HAZOP, process. Right Ans
- a. Subdivides the project or system design into small components b. Reviews
each component to identify risks c. Identifi es the cause and potential
outcome(s) for each risk d. Develops a solution for each risk e. Ensures that
solutions work and reevaluates as necessary
Describe the SWOT approach to risk identification. Right Ans - SWOT—an
acronym for strengths, weaknesses, opportunities, and threats—is a type of
team approach that is useful in analyzing a new project or product. The
strengths and weaknesses are internal factors to be considered. The
opportunities and threats are external factors.
Explain the ideal outcome of a SWOT analysis. Right Ans - The SWOT
analysis should ideally conclude with a "go" or "no go" recommendation for a
specifi c project and should include discussion on whether weaknesses or
threats can be converted into strengths or opportunities.
Brianna, the risk manager at Build It Construction Co., has disseminated a
forklift safety checklist among operators. Why might this action prove only
partially eff ective? Right Ans - Brianna's checklist can communicate
known risks to Build It's forklift operators. For example, it can require them to
examine seat belts, headrests, masts, carriages, forks, battery connections,
lights, horns, and brakes and to check for fuel leaks. But it can't tell them
whether the forklift manufacturer issued a recall or predict that a critical part
is about to fail.
How do emerging risk assessment tools and techniques, such as sensors, radio
frequency identification tags, artificial intelligence, and computer vision,
complement traditional risk identification and analysis techniques? Right
Ans - Emerging technologies and smart devices provide real-time data used
for dynamic risk identifi cation and assessment. Although these technologies,
products, and operations don't replace more traditional risk identifi cation
and analysis techniques, they do overcome some of the shortcomings of the
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