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ARM 54 Exam – Questions & Accurate Answers (Pass!)
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ARM 54 Exam – Questions & Accurate Answers (Pass!)
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ARM 54 Exam – Questions & Accurate Answers (Pass!)Integration of the management principles governing the organization with the
risk management process is Right Ans - Risk governance
As the risk manager for Alpha Corp, Ann Marie recommended that Alpha
should follow an international risk management standard and framework.
Which one of the following describes risk management standards developed
by recognized authorities? Right Ans - Organizations follow risk
management standards voluntarily
The structure that supports the organization's risk management objectives
and strategies is the Right Ans - Risk management framework
A U.S.-based athletic apparel company has manufacturing plants in the Pacific
Rim. Its major product markets are the U.S., Canada, and Europe. The
company would like to develop a risk management program for its supply-
chain risk. A recognized international standard for this purpose is Right
Ans - ISO 31000
Which one of the following statements is true regarding the International
Organization for Standardization's ISO 31000 standard? Right Ans - ISO
31000 applies regardless of whether the risk has positive and/or negative
consequences
The traditional definition of risk management reflects the traditional concept
of risk as Right Ans - Negative
Which one of the following statements is true regarding the evolution of risk
and risk management? Right Ans - 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
Right Ans - 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?
Right Ans - 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? Right Ans - 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 Right Ans - Systemic risk
Which one of the following risk management program goals enhances an
organization's reputation? Right Ans - 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 Right Ans - 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 Right Ans - Operate economically and
efficiently
Risks from accidental loss, including the possibility of loss or no loss defines
Right Ans - Hazard risk
Which one of the following is essential to an effective risk management
program? Right Ans - 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? Right Ans - 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? Right Ans -
, 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, Right Ans - 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?
Right Ans - 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?
Right Ans - 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? Right Ans - 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 Right Ans -
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 Right Ans - Both a hazard risk and an operational risk-Carol's
theft risk can be classified as both a hazard risk and an operational risk.
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