Free ARM-P Practice Questions

Question 1

At renewal, a transit authority finds that routine bus body-damage claims are frequent, predictable, and affordable from its authorized claims fund. First-dollar insurance for these claims costs more than their expected retained cost plus administration. In contrast, a major passenger-injury judgment could exceed the authority's financial capacity, and suitable liability insurance is available. The board wants to minimize expected financing cost without retaining losses it cannot absorb. Which arrangement fits that objective?

Accepted Answer

Retain the predictable body-damage layer and insure liability losses beyond the authority's financial capacity.

Answer

Insure both exposures from the first dollar to eliminate fluctuations in the authority's routine claim payments.

Answer

Insure routine body damage and finance catastrophic liability judgments from future operating-budget appropriations.

Answer

Retain both exposures and use their combined average annual loss as the ceiling for the claims fund.

Question 2

Two allegations follow a collision at a county intersection. One challenges the council's documented decision to phase signal upgrades over several years. The other concerns a crew's failure to repair a reported malfunction within a mandatory repair period. For these claims, the applicable statute protects discretionary planning decisions but not negligent performance of mandatory maintenance. How does that distinction affect the county's immunity defense?

Accepted Answer

The scheduling choice is protected; the maintenance allegation remains subject to negligence analysis.

Answer

Both are protected because traffic-signal work is a governmental rather than commercial function.

Answer

Neither is protected once the county has received notice of the malfunction.

Answer

The maintenance allegation is protected because crews exercise judgment; the scheduling decision is not.

Question 3

Last year, a county's refuse fleet recorded 12 preventable collisions over 600,000 vehicle-miles. This year, it recorded 15 over 1,000,000 vehicle-miles. Reporting definitions and loss-record maturity are unchanged, and service conditions are comparable. The director cites the three additional collisions as evidence that driving performance deteriorated. What does the exposure-adjusted comparison show?

Accepted Answer

The rate fell from 2.0 to 1.5 collisions per 100,000 miles, a 25% reduction.

Answer

The rate rose from 12 to 15 collisions per 100,000 miles, a 25% increase.

Answer

The rate fell from 2.0 to 1.5 collisions per 100,000 miles, a 0.5% reduction.

Answer

The rate fell from 2.0 to 1.5 collisions per 100,000 miles, a 33.3% reduction.

Question 4

"Investment earnings kept us in surplus, so member contributions covered our claims and operating expenses," says a risk pool trustee. The annual report shows a combined ratio of 108%, calculated using incurred losses plus operating expenses divided by earned contributions. Investment income produced a positive overall result. The sound correction to the trustee's statement is:

Accepted Answer

Contributions fell short of loss and expense costs; investment income offset the underwriting deficit.

Answer

The ratio establishes insolvency, so an immediate member assessment is needed to restore solvency.

Answer

The positive overall result confirms that contributions adequately funded the year's claims and expenses.

Answer

The ratio indicates overreserving; reducing claim reserves would reconcile it with the investment result.

Question 5

Before a municipal sewer crew enters a permit-required valve chamber, its calibrated monitor reads 20.8% oxygen and flammable vapor at 14% of the lower flammable limit (LFL). The city has adopted 29 CFR 1910.146 for this work, and the permit prohibits entry into a hazardous atmosphere. The crew argues that the oxygen reading permits entry. What should the entry supervisor do?

Accepted Answer

Withhold entry authorization; the vapor reading identifies a hazardous atmosphere despite the normal oxygen level.

Answer

Authorize brief entry with an attendant, because the oxygen reading is within the acceptable range for the task.

Answer

Authorize entry with respiratory protection, treating the vapor reading as an inhalation hazard rather than a fire hazard.

Answer

Authorize entry with continuous monitoring, using the full lower flammable limit as the threshold for withdrawing workers.

Question 6

After a playground gate fails and injures a child, the city provides medical assistance and closes the affected area. The parent has announced an intention to pursue a claim. Engineers can document the gate's installed condition, remove and preserve the complete failed assembly without altering it, and install a safe replacement. Counsel confirms that these preservation steps satisfy the applicable requirements. Which instruction preserves the evidence without unnecessarily prolonging the closure?

Accepted Answer

Document the installation, retain the failed assembly and relevant records, then replace the gate and reopen after safety checks.

Answer

Leave the gate installed and the playground closed until the claimant's expert conducts an on-site inspection.

Answer

Replace the gate and discard the failed assembly after preserving photographs, witness accounts, and the incident report.

Answer

Photograph and repair the original assembly, returning it to service so it remains available for a later inspection.

Question 7

Floodwater crosses city and county boundaries, and both jurisdictions have incident-management authority. Their emergency plan uses the Incident Command System. The county emergency operations center (EOC) is arranging shelter space and outside resources, but an EOC official begins issuing assignments directly to rescue crews. Which arrangement resolves the conflict while preserving both jurisdictions' authority?

Accepted Answer

Use Unified Command for common objectives, field supervisors for tactics, and the EOC for support.

Answer

Put the EOC director in charge of tactical assignments as well as resource coordination.

Answer

Retain separate objectives and have the EOC select which jurisdiction's orders field crews should follow.

Answer

Give the jurisdiction contributing the most rescue crews sole command, while the other jurisdiction relinquishes incident authority.

Question 8

The city's road-resurfacing contract requires additional-insured protection on a primary and noncontributory basis. The contractor supplies a current liability certificate listing the city as certificate holder. The stated limits meet the contract, but no endorsements have been supplied. What should the risk manager obtain to verify the required protection?

Accepted Answer

Applicable policy endorsements granting the city additional-insured status and the required primary and noncontributory protection.

Answer

A revised certificate describing the city as an additional insured and repeating the contract's primary and noncontributory requirement.

Answer

A separate indemnity agreement requiring the contractor to reimburse the city for liability arising from the resurfacing work.

Answer

A performance bond naming the city as obligee and guaranteeing completion of the resurfacing contract for its full value.

Question 9

A utility operates two pumping stations in separate buildings. Either station can supply the entire system, but both depend on one electrical substation and neither has independent backup power. An analyst multiplies the individual pump-failure probabilities and labels the result the probability of a complete water-service outage. What change is necessary before relying on that model?

Accepted Answer

Include failure of the shared substation as another path to losing both pumping stations.

Answer

Add the pump-failure probabilities, since a failed pump would interrupt service.

Answer

Use the higher pump-failure probability as a conservative estimate of the likelihood of complete service loss.

Answer

Average the two probabilities because the stations provide equal amounts of standby capacity.

Question 10

A county repeatedly misses courthouse fire-door inspections. Its facilities director controls maintenance staff and the operating budget; the risk manager maintains exposure reports and arranges insurance. The facilities director asks the central risk office to own the deficiencies because it arranges all property and liability coverage. Who remains accountable for getting the inspections completed?

Accepted Answer

The facilities director, who controls the maintenance work, staffing, and operating resources needed to correct the failures.

Answer

The risk manager, because maintaining the central exposure register includes ownership of its listed risks.

Answer

The governing board, because approving risk policy includes direct responsibility for completing routine inspections.

Answer

The internal auditor, because independent assurance includes implementing the corrective actions its reviews identify.

Free ARM-P Practice Questions

Domain 1: Why Manage Risk?

Question 1

Domain 2: How Do Organizations Identify Risk?

Question 2

Domain 3: How Do Organizations Categorize and Measure Risk?

Question 3

Question 4

Domain 4: How Do Organizations Analyze Risk Events?

Question 5

Domain 5: How Do Organizations Implement Risk Treatment Strategies?

Question 6

Question 7

Domain 6: How Do Organizations Implement a Risk Culture Strategy?

Question 8

Domain 7: How Do Organizations Maintain Resilience?

Question 9

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