ARM 401

A risk map showing a large difference between inherent and residual risk indicates which one of the following? Select one: A. The risk is within the organization's risk appetite B. The current risk treatment is ineffective C. The risk does not need to be treated D. The current risk treatment is effective

D

After meeting with an external expert on climate change, an organization's risk professional will need to do all of the following, EXCEPT: Select one: A. Communicate all of the potential risks cited by the external expert to the board of directors B. Recommend a treatment technique for risks with severe potential C. Identify those risks that are most likely to affect the organization D. Assess the potential severity of the risks to the organization

A

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? Select one: A. SWOT analysis B. Scenario analysis C. HAZOP workshop D. Delphi technique

A

Brendan is a new risk manager at a Shelton Manufacturing in North Carolina. Because the company has never experienced any consequences from a hurricane, the previous risk manager never really analyzed the risks associated with such an event. Brendan feels that a hurricane could trigger multiple far-reaching consequences and that the risk requires a thorough analysis. Due to Shelton Manufacturing's lack of historical data Brendan has decided to use a structured process that incorporates expert opinions into the probability estimations. Which one of the following types of risk assessment is Brendan using? Select one: A. Predictive technique B. Risk management technique C. Risk control technique D. Qualitative analysis

A

East Side Fitness has decided to merge with a yoga studio with two locations near-by. The owners believe that with this complimentary business, they will be able to increase the membership fees for current members and also grow the overall membership. Which one of the following quadrants of risk will be most influenced by this decision? Select one: A. Strategic risk B. Financial risk C. Operational risk D. Hazard risk

A

Fault tree analysis provides guidance in choosing among loss prevention alternatives. An "and" gate connecting events in rectangles C, D, and E to the event in rectangle A indicates which one of the following? Select one: A. Preventing the event in rectangle C, D, or E from occurring will prevent the event in rectangle A from occurring. B. The event in rectangle C must be prevented in order to prevent the events in rectangles D and E from occurring. C. The event in rectangle C must be prevented in order to prevent the event in rectangle A from occurring. D. The events in rectangles C, D, and E must all be prevented in order to prevent the event in rectangle A from occurring.

A

In failure mode and effects analysis, a failure mode's effect on a process requires identifying the effect's location in the system being analyzed. A failure mode with an effect on the same level that is being analyzed produces Select one: A. A local effect. B. A next-higher level effect. C. A community effect. D. An end effect.

A

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 allow them to be measured based on likelihood and the level of risk to the organization. Which one of the following is the most appropriate tool for James? Select one: A. Organizational risk register B. SWOT analysis C. Facilitated workshop D. Risk map

A

The initial phase in the life cycle in any safety system is the Select one: A. Conceptual phase. B. Production phase. C. Engineering phase. D. Preliminary phase.

A

Tom works as a safety engineer at Cold Rolled Steep Corporation. During a system safety analysis, he identified the important components of the production process and has ranked the severity of losing each component into four failure categories. This is an attempt to establish priorities of the hazards and controls. Which one of the following analyses is Tom using? Select one: A. Criticality analysis B. Casual factor analysis C. Job safety analysis D. Failure mode and effects analysis

A

Using fault tree analysis, an "and" gate is connecting the events in rectangles C, D, and E to the event in rectangle A. If the probabilities of events in rectangles C, D, and E of the fault tree are .10, .20, and .30, respectively, what is the probability that the event in rectangle A will occur? Select one: A. .006 B. .100 C. .300 D. .600

A

Which one of the following is a technique used to provide a visual perspective of an organization's risks and to prioritize those risks? Select one: A. Risk mapping B. Risk register C. SWOT analysis D. Risk quadrants

A

Within a system safety context, the immediate physical environment includes Select one: A. Temperature, illumination, pressure, and working surfaces. B. Social norms and conventions and safety-environmental-transportation laws and regulations. C. Definitions of authority and responsibility that exist within the organization. D. The policies and procedures that govern the interaction of the system's physical elements.

A

A phase in the life of a system when the basic purpose and preliminary design of the system are formulated is the Select one: A. Production phase. B. Conceptual phase. C. Deployment phase. D. Engineering phase.

B

A worker for Build-Rite Construction Company removed the pressure gauge and warning sticker from an air compressor. The pressure gauge automatically shuts off the compressor when the pressure gets too high. The sticker warned that an explosion could result if the pressure was too high. Without the pressure gauge in place, the air compressor exploded. The explosion killed one worker and severely injured another. If Build-Rite performs a root cause analysis (RCA) of this fatal accident, which one of the following might be determined to be a root cause? Select one: A. Explosion of the air compressor B. Inadequate training C. Removal of the warning sticker D. Removal of the pressure gauge

B

Alice is an assembly-line worker in an auto parts manufacturing plant. One day she notices some irregularities in the operation of the punch press. Concerned about meeting production goals, she continues to operate the punch press without reporting the malfunction. Later that day, the punch press shatters, injuring Alice and several of her co-workers. This example best illustrates the accident causation theory of the Select one: A. Change analysis. B. Domino theory C. Energy transfer theory. D. Technique of operations review approach.

B

Erin is a project manager at Shelton Manufacturing. She is responsible for a major project that will require the collaboration of many different groups. Erin needs to motivate everyone from the sales force and support team, to the suppliers, production lines, and logistics teams to achieve the goal by July 1st. Which one of the following is key in order for Erin to achieve this collaboration? Select one: A. Advising each group of the method that she wants them to use to complete their task. B. Putting the desired result at the forefront and making sure that everyone knows what group success looks like. C. Encouraging group members to ignore obstacles and keep moving forward. D. Setting individuals goals for each stakeholder involved in the project.

B

Gaining a holistic perspective requires Select one: A. Becoming an expert on the work that every stakeholder performs. B. Developing a thorough understanding of each unit's role and how it supports or depends on other units and stakeholders. C. Encouraging individuals to resolve issues within their own work units. D. Designating one individual to be responsible for initiating meetings and dominating conversations.

B

In order to achieve collaboration, group leaders must Select one: A. Remain focused on achieving the goals of their individual groups. B. Remain focused on preventing stakeholders from straying from the common goal. C. Focus on the worker's personality rather than results. D. Promote competition among members of the group.

B

Lucas, a risk professional for Jones Incorporated, recently met with experts from the utility industry to discuss the potential loss of supply and risks to the infrastructure. Lucas must now decide which risks, and proposed treatments, need to be communicated to the board of Jones Incorporated. Lucas should make this decision based on Select one: A. The supply source involved. B. The organization's risk appetite and tolerance levels. C. Whether any government regulations are involved or not. D. Whether the risk in natural or man-made.

B

Murray Supply Company has a commercial property policy with a $500,000 building limit and a $50,000 deductible. A tornado passed through the area and damaged one of the company's warehouses. The claims adjuster advised the risk manager that the amount of damage to the warehouse was $20,000. Which one of the following represents Murray Supply Company's risk threshold for a property loss? Select one: A. The $20,000 property loss B. The $50,000 property policy deductible C. The $500,000 building limit D. The $500,000 building limit less the $20,000 loss

B

Risk maps differ from other risk assessment tools and techniques in which one of the following ways? Select one: A. Risk maps are able to quickly explore a vast number of possible outcomes based on large datasets. B. Risk maps identify, prioritize, and quantify risks in a two-dimensional pictorial that illustrates frequency and severity on vertical and horizontal axes. C. Risk maps have the potential to identify both negative risks and opportunity risks. D. Risk maps dissect processes within the organization from input to output for the purpose of improving them.

B

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? Select one: A. Carla should speak with internal subject-matter experts in hopes that she can avoid needing the external 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 try to learn as much as possible about wildfires, so she can impress the wildfire experts.

B

The use of risk quadrants to identify and categorize risk can provide a framework for risk identification. One quadrant includes such risks as loss of production due to a key supplier not delivering raw materials or a mechanical breakdown of equipment. This risk quadrant is Select one: A. Hazard risk. B. Operational risk. C. Strategic risk. D. Financial risk.

B

Which one of the following statements about root cause analysis (RCA) is true? Select one: A. The first step in root cause analysis is analyzing causal factors. B. A root cause must produce effective recommendations for prevention of future accidents. C. Root cause analysis is aimed at reducing the harmful effects of a loss once the loss has occurred. D. Weather conditions and earthquakes can be considered root causes for some losses.

B

Which one of the following statements is true regarding the use of risk registers with scenario models? Select one: A. The risk manager should complete a risk register for each location of the organization. B. A risk register should record the likelihood of a scenario along with the consequences of associated risks. C. The likelihood of a risk register's scenario should not vary significantly among locations of the organization. D. An interactive computer system should be used for risk registers so they can be updated once a year.

B

A tool developed at the risk owner level that links specific activities, processes, projects, or plans to a list of identified risks and results of risk analysis and evaluation; and that is ultimately consolidated at the enterprise level is called a Select one: A. Risk map. B. Risk matrix. C. Risk report. D. Risk register.

D

A risk management professional should ensure that an organizational risk register has which one of the following characteristics? Select one: A. Compiles documents from multiple projects B. Includes only the most severe risks C. Provides interactive use for risk owners D. Prioritizes risk based on historical losses

C

According to the technique of operations review approach, one category of fault of an organization's management is Select one: A. Inherited psychological disorders. B. Unsafe act. C. Failure to take responsibility. D. Fault of person.

C

Emma is a risk management professional at a chemical engineering organization. A new process is being designed and Emma has been told that all risks must be identified and eliminated during the design stage. Emma is a risk management professional, but not a chemical engineering expert. She has assembled a team of engineering experts and stakeholders to identify the risk associated with the process by subdividing the process into components and reviewing each component and then recommend solutions. Which one of the following team approaches to risk identification has Emma chosen? Select one: A. Scenario analysis B. SWOT analysis C. HAZOP approach D. Delphi technique

C

Harris Company is analyzing its workers compensation loss exposure. Harris Company retains most of the exposure and purchases excess insurance to cap its liability on any individual claim. Because Harris Company has a large work force, it can predict its workers compensation cost with some level of accuracy. For next year, the risk manager estimates that there is a 70% chance that workers compensation costs will be $6 million or less, a 25% chance workers compensation costs will be between $6 million and $8 million, and a 5% chance workers compensation costs will exceed $8 million. The type of analysis the risk manager performed is called Select one: A. HAZOP analysis. B. Qualitative analysis C. Quantitative analysis. D. SWOT analysis.

C

Home Appliance Company has decided to change its production method. Previously, small teams of workers assembled washers, dryers, and dishwashers. Under the new production method, an assembly-line will be used, with some functions performed by robotics. Before making the change, Home Appliance Company has created a team of experts from company personnel to identify all of the risks inherent in the new production method and to recommend measures to address these risks. The team will assemble in a facilitated workshop and follow these steps: Divide the production method into components Review each component to identify risk Identify causes and potential outcomes for each risk Develop a solution for each risk. This team approach is risk identification is called a Select one: A. Delphi technique. B. Facilitated workshop. C. Hazard and operability (HAZOP) study. D. SWOT (strengths, weaknesses, opportunities, threats) analysis.

C

Insurance Company (IC) sells its coverages through independent insurance agents. Independent agents represent several insurance companies. Tom, the president of IC, has learned that the independent agent who is the highest producer for IC is considering selling his agency. IC is considering acquiring the agency since Tom is concerned that if the agency is sold, IC may lose a substantial amount of business. Tom asked IC's risk manager to analyze the prospective purchase. The analysis revealed that the acquisition would likely secure most of IC's book of business with the agency but also revealed local competitors that would try to place the business as well. In addition, the analysis revealed the opportunity for IC to move some accounts currently placed with other insurers over to IC. Also, it was learned that a competitor expressed an interest in the agency acquisition. The analysis performed by the risk manager is a form of Select one: A. HAZOP analysis. B. Decision tree analysis. C. SWOT analysis. D. Risk map analysis.

C

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 Select one: A. Volatility. B. Speculative risk. C. The effectiveness of the current risk treatment. D. The necessity of risk financing.

C

SE Industries has identified windstorm as a risk. The risk manager has assembled a team to project the potential consequences of windstorm. The team includes individuals from various functions within the organization. Which one of the following team approaches to risk identification is SE Industries using? Select one: A. Delphi technique B. HAZOP C. Scenario analysis D. SWOT analysis

C

The purpose of fault tree analysis is to Select one: A. Quantify the probability of each possibility identified in the analysis. B. Project consequences of some failure of a system component. C. Identify the various ways of interrupting the sequence of events leading to system failure so that the failure itself can be prevented. D. Provide an opportunity to discover and correct any defects in a product or process while it is still in its early engineering phases.

C

After a month in which three employees were seriously injured at company paper mills, Ashley, the risk manager of Bright White Paper Company, wanted some answers about the causes of employee injuries. Ashley independently contacted the plant manager and foreman at each of the company's plants. She asked each person to complete a confidential questionnaire regarding safety procedures. After receiving the responses to the questionnaire, Ashley summarized the results and asked the same questions again instructing each person to consider revising their responses based on the initial questionnaire results. The analysis revealed that new workers were not being properly trained and that a lax attitude toward safety was present at the majority of the plants. The team approach to risk identification Ashley employed is called Select one: A. HAZOP analysis B. Scenario analysis. C. SWOT analysis. D. The Delphi technique.

D

Air-Freight Company wants to use failure mode and effects analysis (FMEA) to analyze its systems, subsystems, components, sub-assemblies, and parts. Level 1 is the overall system for shipping freight. Level 2 is the system segments, with the prime items (air freight hubs, schedulers, and logistics) designated as Level 3. Level 4 is the subsystems (local freight handlers, package sorters, etc.). Level 5 is the hardware and parts (forklifts, conveyor belts, planes, and delivery vans, etc.). In FMEA, these various systems and subsystems are called Select one: A. Complexity levels. B. Risk priority levels. C. Critical levels. D. Indenture levels.

D

Brenda is the new risk manager at Telecom Company. She did a preliminary analysis to identify organizational risks. Brenda then scheduled a meeting of the organization's leaders, key employees, and other stakeholders. Brenda asked her assistant, Brian, to moderate the session since he is skilled in risk identification, and he is a skilled communicator as well. Brian encouraged brainstorming, and asked follow-up questions. After the session, Brenda and her risk management colleagues had a much deeper understanding of Telecom's risks. The technique that Brenda applied is called a Select one: A. SWOT analysis. B. Group-think. C. Delphi technique session. D. Facilitated workshop.

D

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 Select one: A. SWOT analysis. B. Scenario analysis. C. Failure mode and effects analysis (FMEA). D. Fault tree analysis (FTA).

D

In risk mapping, which one of the following represents the level of risk that is within an organization's risk appetite? Select one: A. Residual risk B. Current risk C. Inherent risk D. Optimum risk

D

Justin is the chief operating officer for Rapid Transit, an over-night package delivery service operating in six states. Rapid Transit has been having problems with late package deliveries. Justin called a meeting of department heads, and hired a facilitator to run a brainstorming session. The facilitator drew a horizontal arrow pointing to the right on a white board. She wrote "Late Package Deliveries" at the end of the arrow. She then started a discussion of causes, focusing on "4 Ms" (Machinery, Methods, Manpower, and Materials). These causes were depicted as diagonal lines off the arrow. Each cause was examined in isolation through probing questions asked by the facilitator, until root causes were determined. The figure the facilitator used to provoke discussion is called a Select one: A. Risk management matrix. B. Fault tree. C. Decision tree. D. Fishbone diagram.

D

Modifying the contact surface or basic structure that can be affected by installing breakaway highway light poles or requiring front and side airbags in automobiles to cushion occupants' impact is a basic strategy of the Select one: A. Techniques of operations review approach. B. Sequence of events theory. C. Change analysis. D. Energy transfer theory.

D

Northern Consolidated is evaluating the financial risk associated with its investment portfolio. The risk manager knows that as interest rates increase, bond values decrease. This relationship is known as Select one: A. Uncertainty. B. A positive correlation. C. Optimization. D. A negative covariance.

D

One form of root cause analysis utilizes a fishbone diagram. Under this technique, a team of investigators brainstorms the causes of a risk event, sorts them into categories, and traces them to their origin. This type of analysis relies heavily on a Select one: A. Scenario analysis. B. Failure mode and effects analysis (FMEA). C. Sensitivity analysis. D. "5 Whys" analysis.

D

The use of risk quadrants to identify and categorize risk provides a framework for Select one: A. Environmental risk identification. B. Positive risk identification. C. Emerging risk identification. D. Holistic risk identification.

D

SoCal Movie Company produces movies at a studio in Southern California. The risk manager decided to identify the range of potential consequences associated with various risks that the company faces. For example, if a severe earthquake occurred while the company was filming a movie, there could be deaths and injuries, destruction of movie sets, delays in production, costs associated with filming at an alternative location, and loss of reputation and good will. The type of analysis performed by the risk manager is called Select one: A. Sensitivity analysis. B. SWOT analysis. C. HAZOP analysis. D. Scenario analysis.

D

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 Select one: A. The risk that is handled, by default, through avoidance. B. The potential risk that the organization does not currently face, but could face if conditions change. C. The risk that cannot be altered and is retained by the firm. D. The risk treatment opportunity to further reduce risk.

D

The second step in the root cause analysis (RCA) process is charting the agents that directly result in one event triggering another event. In RCA, these agents are called Select one: A. Hygiene factors. B. Stimulus factors. C. Precedence factors. D. Causal factors.

D

To accurately determine its level of risk, an organization must examine the effectiveness of its efforts to prevent losses from occurring and to reduce the severity of losses that do occur. An organization's efforts in this area are called Select one: A. Risk identification. B. Risk retention. C. Risk transfer. D. Risk control.

D

Which one of the following risk assessment tools has the potential to identify both negative risks and opportunity risks? Select one: A. Risk maps B. Cause and effect analysis C. Failure mode and effects analysis D. Audits

D

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? Select one: A. Overload some individuals with more work than others B. Rely on the most senior individuals to take on additional duties C. Focus on the individuals' personality rather than results D. Try to enrich individuals' work rather than merely expand it

D