Exam (elaborations)
ARM 54 Exam: Questions/Answers (Guaranteed Pass!)
- Course
- Institution
ARM 54 Exam: Questions/Answers (Guaranteed Pass!)
[Show more]
Content preview
ARM 54 Exam: Questions/Answers (Guaranteed Pass!)Most general liability insurance policies include coverage for which one of the
following? Right Ans - product liability
General Liability Insurance Right Ans - covers the insured's legal defense
costs when defending against a claim of liability
Commercial Package Policy (CPP) Right Ans - coverage for business
property, liability, and business income
One of the levels of risk a business faces is the risk of accidental loss, including
the possibility of loss or no loss. This category of risk is Right Ans - Hazard
Risk
Which one of the following requires that financial bank holding companies
and certain other public companies have a risk committee and at least one
member of the committee must be a risk-management expert? Right Ans -
The Dodd-Frank Act
The Dodd-Frank Act, Solvency II, and Basel III all have the purpose of reducing
Right Ans - Systemic Risk
Risk management reviews the cost of risk associated with protecting cash
flows, assets, and personnel. Which one of the following statements best
describes the key components of an organization's cost of risk? Right Ans -
Risk management department costs, retained losses, premiums, and risk
control costs
To an insured organization, what is an example of a cost of risk associated
with an asset or activity? Right Ans - Cost of sprinkler system
Aligning risks with the organization's risk appetite defines Right Ans -
Tolerable uncertainty
Risk management programs should Right Ans - operate economically and
efficiently
Sean recently started a small consulting practice. Sean is the only employee of
the business and the sole generator of revenue. Sean is very concerned that in
,the event that he becomes disabled due to an accident or disease there will be
no revenue coming into the business. What is Sean's concern? Right Ans -
Tolerable uncertainty and earnings stability
Measure of the maximum potential damage associated with an occurrence?
Right Ans - Exposure
The relationship between which two basic measures is critical for risk
management in assessing risk and deciding whether and how to manage it?
Right Ans - Likelihood and consequences
True about the basic measures that apply to risk management Right Ans -
Consequences measure the degree to which an occurrence could positively or
negatively affect an organization
Systemic risks are generally Right Ans – non-diversifiable
Accurate statement regarding pure and speculative risks Right Ans - Every
business venture involves speculative risks
True statement about subjective and objective risk classifications Right
Ans - Subjective risk can exist even where objective risk does not
Hardware Store has been able to control its prices and inventory since it has
no competitors. A new highway currently being constructed is going to allow
increased competition for Hardware Store. According to the quadrants of risk,
the risk of increased competition falls into the category of Right Ans -
Strategic risk
The concept of correlation, in the context of why enterprise risk management
works Right Ans - Is the proposition that correlation increases risk while
uncorrelated risks can reduce risk
Three main theoretical concepts explain how ERM works. One theoretical
concept considers not only the combination of individual risks but also their
interactions. This theoretical concept is Right Ans - the portfolio theory
, Which one of the following best describes a result of an organization's
adaptive strategy? Right Ans - Gaining and maintaining a competitive
advantage
Which one of the following components of the COSO framework refers to the
practices that permit an org to continually and through all departments assess
and respond to risk? Right Ans - Performance
A component that is a key feature of the COSO standard but not other risk
management standards Right Ans - Control activities
COSO 2004 originated with a focus on Right Ans - financial risk
Aspects of COSO framework's components that are particularly integral to an
organization's achievement of enhanced value are Right Ans - governance,
strategy, and performance
In 1999, the Basel Committee issued a proposal for a revised Capital Adequacy
Framework which consisted of three pillars. One pillar is review of an
institution's internal assessment process and capital adequacy. This pillar is
Right Ans - Supervisory
Solvency II aims to achieve consistency for insurers across Europe. Solvency II
includes standards for which one of the following areas that was not
addressed in Solvency I? Right Ans - Risk management
Based on Basel III principles, which one of the following groups should take
the lead in establishing a strong risk management culture? Right Ans -
Board of Directors
For property, which one of the following causes of loss will most likely result
in a total loss? Right Ans - theft
This type of loss is considered an indirect loss Right Ans - net income loss
Real vs. Personal Property Right Ans - an item may be real or personal
property depending on the "attachment" criterion and other circumstances -
trees in a yard = real & earrings = personal
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 LeCrae. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
67096 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now