Telematics devices allow organizations to accurately identify patterns of risk and
predict risk for which one of the following types of loss
... [Show More] exposures?
A. Automobile
B. Property
C. Workers compensation
D. Business income - Answer A
Which one of the following is a major benefit that smart insurance contracts can
provide to insurance customers?
A. Smart contracts can render a risk completely preventable.
B. Smart contracts can provide broader coverage at a lower cost.
C. Smart contracts can dramatically increase the speed of loss payments.
D. Smart contracts can significantly increase the speed of premium payments. -
Answer C
Maxwell Company has just invested a large sum in new, highly-sophisticated
computer equipment and building renovations. Maxwell arranged to lease identical
equipment at another location so that it could use the equipment in the event of a
disaster at its location. Maxwell's lease of identical equipment at another location is
an example of
A. Duplication.
B. Separation.
C. Loss reduction.
D. Diversification. - Answer A
Olivia is planning a meeting to explain a new cyber security procedure. She expects
that the meeting will be impeded by hidden agendas. Which one of the following is
the best way for Olivia to deal with potential hidden agendas?
A. Olivia should refuse to take questions during her meeting, and request that any
questions be forwarded to her in writing after the meeting.
B. Olivia should start the meeting by stating that she does not expect everyone like
the new procedure, but they must accept it.
C. Olivia should start the meeting by asking participants to state their concerns or
feeling about the procedure.
D. Olivia should hold a separate meeting for those individuals who she suspects
have a hidden agenda. - Answer C
Which one of the following is a common problem with meetings that leaders should
try to avoid?
A. Trying to stick to an agenda and avoid interruptions
B. Committing to an end time, as well as a start time
C. Having the wrong people attend
D. Stating the objective in writing before the meeting - Answer C
Which one of the following statements about correlation and covariance is true?
ARM 402 PRACTICE EXAM TEST BANK 300 QUESTIONS
WITH 100% COMPLETE AND CORRECT ANSWERS/2023
VERSION/A+GRADE
A. Covariance is a scaled version of correlation and ranges from -1 to +1.
B. The correlation between variables ranges from 0 to +1.
C. Covariance measures the extent to which variables move together or
independently.
D. Correlation measures causality. - Answer C
Once a holistic risk management program is created and put into effect, which one of
the following methods can be used to allow constant and consistent monitoring of the
process?
A. Bow-tie diagram
B. Feedback loop
C. Dashboard reporting
D. SWOT analysis - Answer B
A risk control technique that reduces the frequency of a particular loss is
A. Loss prevention.
B. Loss reduction.
C. Diversification.
D. Duplication. - Answer A
Ivanhoe Corporation purchases stock in a bank and in a pharmaceutical
manufacturer. Because these are unrelated industries, Ivanhoe hope that any losses
in one stock will be more than offset by profits in another. Ivanhoe is using which one
of the following risk management techniques?
A. Risk transfer
B. Duplication
C. Diversification
D. Separation - Answer C
Pacific Bar and Grill was having a problem with employees slipping and falling in the
kitchen and bar areas. Rather than incur the cost to replace the floors with a new
non-slip surface, the owners decided to require employees to wear slip-resistant
shoes and monitor the floors for spills on a regular schedule. They are also keeping
track of the number of employee slips and falls and the associated costs, as well as,
the expenses involved with this risk management program. Which one of the
following methods is Pacific Bar and Grill using to measure the effectiveness of this
risk management process?
A. Dashboard reporting
B. Feedback loop
C. Scorecard
D. Bow-tie diagram - Answer B
Ed is investment manager of the Nellor Foundation, a charitable trust. Recently, Ed
met with the president of the Foundation. Up until now, assets have been invested in
financial assets. Ed told the president that after performing a simulation, he would
ARM 402 PRACTICE EXAM TEST BANK 300 QUESTIONS
WITH 100% COMPLETE AND CORRECT ANSWERS/2023
VERSION/A+GRADE
like to add a high-yielding, higher risk real estate investment to the portfolio. When
the president asked if it would be too risky, Ed replied, "It will actually increase
expected returns while reducing risk." The purported reduction in risk occurs
because
A. The real estate investment will not be large enough to significantly impact on the
portfolio.
B. Rental income generated by the real estate investment is not taxable.
C. Taxes on real estate investments may be deferred.
D. The real estate investment returns are negatively correlated with the other assets.
- Answer D
Which one of the following risk control techniques is generally used to reduce the
frequency of a particular loss?
A. Separation
B. Loss reduction
C. Avoidance
D. Loss prevention - Answer D
Which one of the following statements regarding correlation analysis is true?
A. Because it incorporates so much data, a risk professional can rely on correlation
analysis only when making a major decision.
B. Abnormal observations and inaccurate data may skew correlation analysis.
C. The range of correlation coefficients is from 0 to +1.
D. Correlation analysis can indicate causality between variables. - Answer B
When organizations invest their assets among a mix of stocks and bonds from
companies in different industry sectors they are using the risk management
technique of
A. Diversification.
B. Duplication.
C. Risk transfer.
D. Separation. - Answer A
Diversification is a risk control technique that
A. Spreads loss exposures over numerous projects, products, markets, or regions.
B. Views the cause of accidents to be a result of business concentration and vertical
integration.
C. Produces a copy or backup and keeps it in reserve.
D. Divides an asset or operation into two or more separate units. - Answer A [Show Less]