Exam (elaborations)
ARM 401 - Holistically Assessing Risk: Q’s And A’s
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ARM 401 - Holistically Assessing Risk: Q’s And A’s
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ARM 401 - Holistically Assessing Risk: Q’s And A’sRisk-adjusted return on capital (RAROC) Right Ans - A financial ratio of
income adjusted for risk to the amount of capital required to maintain
solvency at a given risk tolerance level.
Covariance Right Ans - The relative association between variables to move
in tandem or independently of each other.
Internet of Things (IoT) Right Ans - A network of objects that transmit data
to and from each other without human interaction.
Risk threshold Right Ans - The range or amount of risk that is acceptable.
Sensor Right Ans - A device that detects and measures stimuli in its
environment.
Radio frequency identification (RFID) Right Ans - A technology that uses
radio frequency to identify objects.
Artificial intelligence (AI) Right Ans - Computer processing or output that
simulates human reasoning or knowledge.
Computer vision Right Ans - A technology that simulates human vision.
Risk register Right Ans - 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.
Risk map Right Ans - A template depicting the likelihood and potential
impact/consequences of risks.
Risk appetite Right Ans - Amount of risk an organization is willing to take
on in order to achieve an anticipated result or return.
Inherent risk Right Ans - The level of risk that would be faced if it were to
remain untreated or no action were to be taken to alter the level of risk.
,Residual risk Right Ans - The level of risk remaining after actions are taken
to alter the level of risk.
Optimum risk Right Ans - The level of risk that is within an organization's
risk appetite.
Risk control Right Ans - A conscious act or decision not to act that reduces
the frequency and/or severity of losses or makes losses more predictable.
Energy transfer theory Right Ans - An approach to accident causation that
views accidents as energy that is released and that affects objects, including
living things, in amounts or at rates that the objects cannot tolerate.
Technique of operations review (TOR) Right Ans - An approach to accident
causation that views the cause of accidents to be a result of management's
shortcomings.
Change analysis Right Ans - An analysis that projects the effects a given
system change is likely to have on an existing system.
Job safety analysis (JSA) Right Ans - An analysis that dissects a repetitive
task, whether performed by a person or machine, to determine potential
hazards if each action is not performed.
System safety Right Ans - A safety engineering technique also used as an
approach to accident causation that considers the mutual effects of the
interrelated elements of a system on one another throughout the system's life
cycle.
Conceptual phase Right Ans - A phase in the life of a system when the basic
purpose and preliminary design of the system are formulated.
Engineering phase Right Ans - A phase in the life of a system when the
system's design is constructed and prototypes are tested.
Production phase Right Ans - A phase in the life of a system when the
actual system is created.
,Operational phase Right Ans - A phase in the life of a system when the
system is implemented.
Disposal phase Right Ans - A phase in the life of a system when the system
reaches the end of its useful life and is disposed of.
Causal factors Right Ans - The agents that directly result in one event
causing another
Failure mode and effects analysis (FMEA) Right Ans - An analysis that
reverses the direction of reasoning in fault tree analysis by starting with
causes and branching out to consequences.
Failure mode Right Ans - The manner in which a perceived or actual defect
in an item, process, or design occurs.
Effects analysis Right Ans - The study of a failure's consequences to
determine a risk event's root cause(s).
Indenture level Right Ans - An item's relative complexity within an
assembly, system, or function.
Local effect Right Ans - The consequence of a failure mode on the
operation, function, or status of the specific item or system level under
analysis.
Next-higher-level effect Right Ans - The consequence of a failure mode on
the operation, function, or status of the items in the indenture level
immediately above the indenture level under analysis.
End effect Right Ans - The consequence of a failure mode on the operation,
function, or status of the highest indenture level.
Criticality analysis Right Ans - An analysis that identifies the critical
components of a system and ranks the severity of losing each component.
Criticality Right Ans - A product of consequence and occurrence ranking,
taken from the risk priority number calculation, used to determine the
relative risk of a failure mode and effects analysis item.
, Risk priority number (RPN) Right Ans - The product of rankings for
consequence, occurrence, and detection used to identify critical failure modes
when assessing risk within a design or process.
Fault tree analysis (FTA) Right Ans - An analysis that takes a particular
system failure and traces the events leading to the system failure backwards
in time.
Root cause Right Ans - The event or circumstance that directly leads to an
occurrence.
Probability analysis Right Ans - A technique for forecasting events, such as
accidental and business losses, on the assumption that they are governed by
an unchanging probability distribution.
Probability distribution Right Ans - A presentation (table, chart, or graph)
of probability estimates of a particular set of circumstances and of the
probability of each possible outcome.
Theoretical probability Right Ans - Probability that is based on theoretical
principles rather than on actual experience.
Empirical probability (a posteriori probability) Right Ans - A probability
measure that is based on actual experience through historical data or from the
observation of facts.
Law of large numbers Right Ans - A mathematical principle stating that as
the number of similar but independent exposure units increases, the relative
accuracy of predictions about future outcomes (losses) also increases.
Value at risk (VaR) Right Ans - A technique to quantify financial risk by
measuring the likelihood of losing more than a specific dollar amount over a
specific period of time.
Earnings at risk (EaR) Right Ans - A technique to assess earnings volatility
by measuring the likelihood that earnings will be below a specific dollar
amount over a specific period of time.
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