ARM 54 UPDATED Actual Exam Questions and CORRECT Answers
2 views 0 purchase
Course
ARM 54
Institution
ARM 54
ARM 54 UPDATED Actual Exam
Questions and CORRECT Answers
Autumn Assurance Group has assets at fair value of $100 million.
The present value of Autumn's liabilities is $85 million. The market
value margin is $5 million. Using probability models, Autumn
determines that its VaR is $8 million bec...
ARM 54 Practice UPDATED Actual Exam
Questions and CORRECT Answers
Risks from accidental loss, including the possibility of loss or no loss defines - CORRECT
ANSWER✔✔- Hazard risk
The traditional definition of risk management reflects the traditional concept of risk as -
CORRECT ANSWER✔✔- Negative
Which one of the following statements is true regarding the evolution of risk and risk
management? - CORRECT ANSWER✔✔- The definition of risk has evolved to include
positive as well as negative attributes
The Dodd-Frank Act, Solvency II, and Basel III all have the purpose of reducing -
CORRECT ANSWER✔✔- Systemic risk
Which one of the following is a common risk management benefit the entire economy would
realize as a consequence of a risk management program? - CORRECT ANSWER✔✔-
Reduced waste of resources-Risk management reduces waste of resources. Allocating
resources for potential losses is a cost because the resources cannot be used for other
purposes that could promote growth.
To an insured organization, which one of the following is an example of a cost of risk
associated with an asset or activity? - CORRECT ANSWER✔✔- Cost of sprinkler systems
One benefit of risk management to the economy is the reduction of the potential for a major
disruption in the functioning of financial markets and the financial system. This risk that is
reduced is called - CORRECT ANSWER✔✔- Systemic risk
Which one of the following risk management program goals enhances an organization's
reputation? - CORRECT ANSWER✔✔- Social responsibility-Social responsibility is the
risk management program goal that will most likely enhance an organization's reputation.
,An organization must meet the standard of care that it owes to others in order to ensure that -
CORRECT ANSWER✔✔- Legal obligations are satisfied-An organization must meet the
standard of care that it owes to others in order to ensure that legal obligations are satisfied.
Risk management programs should - CORRECT ANSWER✔✔- Operate economically and
efficiently
Which one of the following is essential to an effective risk management program? -
CORRECT ANSWER✔✔- Support of the organization's senior management-Support of the
organization's senior management is essential to an effective risk management program.
Which one of the following provides a measure of the maximum potential damage associated
with an occurrence? - CORRECT ANSWER✔✔- Exposure
In an effort to grow its personal lines book, an insurer decides to offer discounts on
homeowners and personal auto insurance to the employees of its largest business lines
account. Which one of the following risk measures is most likely to increase as a result of this
marketing decision? - CORRECT ANSWER✔✔- Correlation-The insurer's risk correlation
will most likely increase as a result of this marketing decision.
According to the law of large numbers, as the number of exposure units insured increases, -
CORRECT ANSWER✔✔- The relative accuracy of predictions about future losses
increases-According to the law of large numbers, as the number of exposure units insured
increases, the relative accuracy of predictions about future losses increases.
The relationship between which two basic measures is critical for risk management in
assessing risk and deciding whether and how to manage it? - CORRECT ANSWER✔✔-
Likelihood and consequences
Risk can be classified as diversifiable or nondiversifiable. Which one of the following
statements is true with respect to this type of risk classification? - CORRECT ANSWER✔✔-
Diversifiable risks tend not to be correlated so they can be managed through diversification or
spread of risk-Diversifiable risks tend not to be correlated so they can be managed through
diversification or spread of risk.
George works for a large company and part of his job is to monitor assets according to their
liquidity. George is particularly concerned that the company fleet cars are affecting its
, liquidity and rising fuel prices are having an adverse effect during tight economic markets. If
George's concerns were categorized as causes of loss according to the quadrants of risk, his
concern most directly relates to which one of the following types of risks? - CORRECT
ANSWER✔✔- Financial risks
Billy owns a beach front cottage which has become his primary residence. Billy's primary
concern is that his home will be hit by a hurricane and badly damaged or even destroyed. For
Billy, this hurricane risk is a - CORRECT ANSWER✔✔- Subjective risk
Carol has worked as a payroll clerk for a small organization for 20 years. Over the years she
received only two small salary increases and began to embezzle funds from the company
since she felt she was not adequately compensated for her job efforts. In terms of the
quadrants of risk, Carol's theft risk can be classified as - CORRECT ANSWER✔✔- Both a
hazard risk and an operational risk-Carol's theft risk can be classified as both a hazard risk
and an operational risk.
Three main theoretical concepts explain how enterprise risk management (ERM) works. One
theoretical concept considers not only the combination of individual risks but also their
interactions. This theoretical concept is - CORRECT ANSWER✔✔- The portfolio theory
The concept of correlation, in the context of why enterprise risk management works, -
CORRECT ANSWER✔✔- Is the proposition that correlation increases risk while
uncorrelated risks can reduce risk-The concept of correlation, in the context of why enterprise
risk management works, is the proposition that correlation increases risk while uncorrelated
risks can reduce risk.
Major Corporation delivers its products nationally using its own fleet of vehicles that are
specially designed to encapsulate and protect the cargo they are carrying. What risk
management technique is being used? - CORRECT ANSWER✔✔- Loss reduction
Which one of the following statements is true regarding enterprise risk management (ERM)?
- CORRECT ANSWER✔✔- The ERM framework encompasses all stakeholders in the
organization
Which one of the following is an objective and consistent measurement tool that can be used
by organizations to conduct periodic self-assessments? - CORRECT ANSWER✔✔- The
Risk Maturity Model (RMM)
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller MGRADES. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $10.49. You're not tied to anything after your purchase.
