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ARM 54 exam: Questions & Accurate Solutions (Rated A+)
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ARM 54 exam: Questions & Accurate Solutions (Rated A+)
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ARM 54 exam: Questions & Accurate Solutions (RatedA+)
Hazard Risk Categories Right Ans - Personnel Risk, Property Risk, Liability
Risk
Personnel Risk Right Ans - uncertainty related to the loss to a firm due to
death, incapacity, loss of health, or prospect of harm to or unexpected
departure of key employees
Property Risk Right Ans - uncertainty related to loss of wealth due to
damage or destruction of property
Liability Risk Right Ans - Uncertainty related to financial responsibility
arising from bodily injury (including death) or loss of wealth that a person or
entity causes to others
Hazard Risk Right Ans - arises from property, liability, or personal loss
exposures
Operational Risk Right Ans - Arises from people, processes, systems, or
control, ex. People risk, IT risk, Management oversight, business processes
Financial Risk Right Ans - arises from the effect of the market forces on
financial assets or liabilities, ex. market risk, credit risk, price risk, liquidity
risk
3 Theoretical Pillars of ERM Right Ans - Interdependency, Correlation,
Portfolio Theory
Interdependency Right Ans - not all different types of risk are independent,
some may be related, the siloed approach is no longer efficient
Correlation Right Ans - relationship between variables, increases risks,
uncorrelated provides balance/hedging of risks
Portfolio Theory Right Ans - assumes that risk includes both individual
risks and their interactions
,Smart Products Right Ans - primary enabler of data capture
Root Cause Analysis Right Ans - the focus of traditional risk assessment
techniques
Risk Management Goals Right Ans - Tolerable uncertainty, Legal and
regulatory compliance, Survival, Business Continuity, Earnings Stability,
Profitability and Growth, Social Responsibility, Economy of Risk Management
Operations
Tolerable Uncertainty Right Ans - aligning risks with the organization's
risk appetite, the total exposed amount that an organization wishes to
undertake on the basis of risk-return tradeoffs for one or more desired and
expected outcomes
Diversifiable Risk Right Ans - is not highly correlated and can be managed
through diversification or spread of risk
Nondiversifiable Risk Right Ans - are correlated, that is their gains or losses
tend to occur simultaneously rather than randomly
Sarbanes Oxley Act Right Ans - requires both the management of public
companies and their auditors to assess and report financial risk and controls
Dodd Frank Act Right Ans - 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
Reasons subjective and objective risk can differ substantially Right Ans -
Familiarity and control, consequences over likelihood, and risk awareness
Advantages of adopting risk management standards Right Ans - adopting
techniques refined over time, and strengthening connection to organizations
around the world that have also adopted the same standards
Components of ISO 31000 Right Ans - Risk Identification, Risk Analysis,
Risk Evaluation
, Principles of ISO 31000 Right Ans - integration throughout the
organization, adoption of a comprehensive and structured approach,
customized based on organization objectives, inclusive of all stakeholder
perspectives, dynamically reactive to internal and external factors, based on
accurate info, mindful of cultural factors, can be continuously improved
Shared characteristics of COSO/ERM and ISO 31000 Right Ans - Enterprise
approach, value creation, integrating with existing process, cultural factors,
importance of defining risk appetite, requires documentation, importance of
communication throughout the organization, require monitoring
Risk Maturity Model Attributes Right Ans - ERM Based approach, ERM
process management, Risk appetite management, root cause discipline,
uncovering risks, performance management, business resiliency and
sustainability
Purpose of Risk Management Standards Right Ans - to help organizations
assess and manage risk
Advantages of using a risk management standard Right Ans - allows
organizations to evaluate a product or process and provide a common
language for external discussion
COSO/ERM Framework Components Right Ans - Governance and culture,
Strategy and objective setting, Performance, Review and Revision, and
Information, communication, and reporting
Solvency II and Basel Right Ans - Governments worldwide have adopted
these regulatory standards designed to unify insurer risk management
principles and prevent systemic risk from overwhelming financial institutions
Hazard Risk Right Ans - Insurance deals primarily with this major risk
category that affects an organization's objectives
Casualty Actuarial Society describes Hazard Risks as the following: Right
Ans - Fire and other property damage, Windstorm and other natural perils,
Theft and other crimes, personal injury, Business Interruption, Disease and
disability, Liability claims
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