ARM - Associate in Risk Management Risk Treatment and Mitigation Questions and Answers

Question 1

A pharmaceutical company ceases all development of a promising new drug after clinical trials reveal it causes severe, life-threatening side effects in a small percentage of the trial population.
This decision to completely halt the project is a clear example of which risk treatment technique?

Accepted Answer

Risk Avoidance

Answer

Risk Modification

Answer

Risk Transfer

Answer

Risk Retention

Question 2

After installing a state-of-the-art fire suppression system and conducting mandatory employee fire safety training, a risk manager evaluates the likelihood and impact of a potential fire at the facility. The level of risk that remains after these control measures have been implemented is known as:

Accepted Answer

Residual Risk

Answer

Inherent Risk

Answer

Speculative Risk

Answer

Secondary Risk

Question 3

A data processing company is concerned about a localized power outage disrupting its operations. To mitigate this risk, it establishes a fully operational, mirrored data center in a different city on a separate power grid. This strategy of maintaining backup facilities or assets is best described as:

Accepted Answer

Duplication

Answer

Diversification

Answer

Contractual Transfer

Answer

Loss Prevention

Question 4

When evaluating a potential risk control measure, a risk manager performs a cost-benefit analysis. Which of the following is the primary goal of this analysis in the context of risk treatment?

Accepted Answer

To ensure the financial cost of implementing the control is justified by the expected reduction in losses.

Answer

To select the control that eliminates all possible risk, regardless of its cost.

Answer

To transfer the maximum amount of financial risk to a third-party insurer.

Answer

To prioritize controls that are mandated by industry regulations over all other factors.

Question 5

A manufacturing plant identifies a risk of worker hearing loss from an excessively noisy machine. The first and most effective solution they implement is to replace the old machine entirely with a new, much quieter model. According to the hierarchy of controls, this action is an example of which type of control?

Accepted Answer

Substitution

Answer

Personal Protective Equipment (PPE)

Answer

Engineering Control

Answer

Administrative Control

Question 6

An organization, after identifying and analyzing the risk of minor, frequent inventory damage, makes a conscious and planned decision to not purchase insurance for this exposure. Instead, it allocates funds in its budget to cover these expected losses as they occur. This form of risk retention is known as:

Accepted Answer

Active Retention

Answer

Passive Retention

Answer

Risk Deferral

Answer

Loss Prevention