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ARM 401 Exam – Questions & Answers (Accurate & Verified)
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ARM 401 Exam – Questions & Answers (Accurate & Verified)
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ARM 401 Exam – Questions & Answers (Accurate &Verified)
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
Select one:
A. Volatility.
B. Speculative risk.
C. The effectiveness of the current risk treatment.
D. The necessity of risk financing. Right Ans - C
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
Select one:
A. The risk that is handled, by default, through avoidance.
B. The potential risk that the organization does not currently face, but could
face if conditions change.
C. The risk that cannot be altered and is retained by the firm.
D. The risk treatment opportunity to further reduce risk. Right Ans - D
Risk maps differ from other risk assessment tools and techniques in which
one of the following ways?
Select one:
A. Risk maps are able to quickly explore a vast number of possible outcomes
based on large datasets.
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 dissect processes within the organization from input to output
for the purpose of improving them. Right Ans - B
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
Select one:
A. The supply source involved.
B. The organization's risk appetite and tolerance levels.
C. Whether any government regulations are involved or not.
D. Whether the risk in natural or man-made. Right Ans - 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?
Select one:
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. Right Ans - B
The use of risk quadrants to identify and categorize risk can provide a
framework for risk identification. One quadrant includes such risks as loss of
production due to a key supplier not delivering raw materials or a mechanical
breakdown of equipment. This risk quadrant is
Select one:
A. Hazard risk.
B. Operational risk.
C. Strategic risk.
D. Financial risk. Right Ans - B
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
Select one:
,A. Risk map.
B. Risk matrix.
C. Risk report.
D. Risk register. Right Ans - D
In risk mapping, which one of the following represents the level of risk that is
within an organization's risk appetite?
Select one:
A. Residual risk
B. Current risk
C. Inherent risk
D. Optimum risk Right Ans - D
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?
Select one:
A. Organizational risk register
B. SWOT analysis
C. Facilitated workshop
D. Risk map Right Ans - A
Which one of the following statements is true regarding the use of risk
registers with scenario models?
Select one:
A. The risk manager should complete a risk register for each location of the
organization.
B. A risk register should record the likelihood of a scenario along with the
consequences of associated risks.
C. The likelihood of a risk register's scenario should not vary significantly
among locations of the organization.
, D. An interactive computer system should be used for risk registers so they
can be updated once a year. Right Ans - B
East Side Fitness has decided to merge with a yoga studio with two locations
near-by. The owners believe that with this complimentary business, they will
be able to increase the membership fees for current members and also grow
the overall membership. Which one of the following quadrants of risk will be
most influenced by this decision?
Select one:
A. Strategic risk
B. Financial risk
C. Operational risk
D. Hazard risk Right Ans - 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?
Select one:
A. Risk mapping
B. Risk register
C. SWOT analysis
D. Risk quadrants Right Ans - A
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?
Select one:
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 Right Ans - B
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.
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