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ARM 401 Practice Exams – Correctly Answered Questions
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ARM 401 Practice Exams – Correctly Answered Questions
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ARM 401 Practice Exams – Correctly AnsweredQuestions
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?
A) Monte Carlo Simulation
B) Variance
C) Telematics
D) Inverse Covariance Right Ans - B) Variance
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
A) The potential risk that the organization does not currently face, but could
face if conditions change
B) The risk treatment opportunity to further reduce risk
C) The risk that is handled, by default, through avoidance
D) The risk that cannot be altered and is retained by the firm Right Ans - B)
The risk treatment opportunity to further reduce risk
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?
A) Carla should try to learn as much as possible about wildfires so she can
impress the 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 speak with internal subject-matter experts in hopes that she
can avoid needing the external wildfire experts Right Ans - B) Carla should
research the field and get a working understanding of wildfires
Cotton Products Company manufactures cotton clothing, towels, sheets, and
other cotton products. All production takes place at one large multi-acre
production facility. The risk manager of Cotton Products Company called a
meeting attended by her staff, the plant foreman, the plant safety engineer,
and the head of operations. She told the group that she wanted to analyze one
problem-the top event-a catastrophic fire at the production facility. The group
discussed all the causes of failure and factors that could contribute to the top
event. The causes of the -top event- were listed, and methods of reducing the
likelihood and consequences of the event were examined. The technique the
risk manager employed is called
A) Fault tree analysis
B) SWOT analysis
C) Failure mode and effects analysis
D) Scenario analysis Right Ans - A) Fault tree analysis
Northeast Urban Properties owns and operates office buildings in New York,
Boston, and Philadelphia. The risk manager decided to examine the impact of
potential terrorist attacks on each building. For example, for the Philadelphia
building, the risk manager examined attacks at three levels: scare (e.g.
suspicious package), minor explosion or gas attack, and large-scale attack. For
each level, the risk manager listed the risk owners, the risk quadrants
impacted, the likelihood of attack, the consequence, the risk level, and the risk
control measures that needed to be implemented. This information was
summarized in a one-page chart. The chart the risk manager prepared is a
A) Risk report with warning color code
B) Risk matrix with value at risk
C) Risk register with scenario model
D) Risk map with simulation Right Ans - Risk register with scenario model
William is a project manager for Parker International. He has been assigned a
key project with a short deadline. William realizes that this project is going to
, require revising the job duties of some individuals and a collaborative effort
from of all team members. When revising job duties, William should do which
one of the following?
A) Try to enrich individuals' work rather than merely expand it
B) Rely on the most senior individuals to take on additional duties
C) Overload some individuals with more work than others
D) Focus on the individuals' personalities rather than results Right Ans - A)
Try to enrich individuals' work rather than merely expand it
Blithe Manufacturing has experienced a drop in market share. The marketing
department has come up with a way to differentiate their product in order to
regain market share. Blithe has assembled a team of individuals representing
different organizational functions to analyze both internal and external factors
of the new product and decide whether or not it is feasible. Which one of the
following team approaches to risk identification is Blithe using?
A) Delphi technique
B) SWOT analysis
C) Scenario analysis
D) HAZOP workshop Right Ans - B) SWOT analysis
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
A) The necessity of risk financing
B) The effectiveness of the current risk treatment
C) Volatility
D) Speculative risk Right Ans - B) The effectiveness of the current risk
treatment
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
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