PRMIA PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics Sample Questions:

1. According to PRMIA governance principles, boards and audit committees should ...

A) Review compensation plans to ensure consistency with corporate risk appetite, competitive market conditions, and fiduciary responsibility to shareholders
B) Be composed of key business unit representatives
C) Leave shareholder accountability to senior management who decides strategic direction
D) Collectively assume responsibility of understanding and reporting the effectiveness of the firm risk management infrastructure

2. Which of the following was NOT a factor in the Long Term Capital Management case?

A) Changes/breakdowns in historical correlations
B) Unwinding of liquid positions at the beginning of major losses
C) Inadequate separation of front and back offices
D) Model risk

3. Every PRMIA chapter is designed to serve the local needs of members, so they often have fairly independent planning structures and ideas. According to the PRMIA Bylaws, Regional Chapters and Regional Directors:

A) Can sign contracts on behalf of PRMIA without prior approval from the Board of Directors
B) Can have meetings that only local members are allowed to attend
C) Can have their own offices, bylaws and regulations provided they do not conflict with those of PRMIA
D) All of the above

4. The Fortress Re finite reinsurance model

A) allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, and as the risks were spread out over time the annual premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability
B) allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, but as the risks were spread out over time the future premiums were not accounted for as current liabilities on the books of the pool members, thus giving a false impression of profitability
C) allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid annual premiums to cover these policies, and as the risks were spread out over the year the annual premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability
D) allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, and as the risks were spread out over time the future premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability

5. For the sentence
"The organization shall encourage all employees to keep abreast of the latest developments in their particular areas of expertise, through ____________, _____________, and _____________ and shall make adequate resources available to enable this to occur," Choose the correct combinations of words from the following options:

A) courses, conferences, journals
B) courses, educational certification, journals
C) journals, courses, compliance mandates
D) conferences, discussion groups, blog sites

Solutions: