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PRMIA 8009 Exam Syllabus Topics:

SectionObjectives
Ethics in Risk Management- Conflict of interest management
- Professional ethics and conduct standards
- Ethical decision-making in financial risk scenarios
Best Practices in Risk Management- Risk identification and assessment processes
- Enterprise risk management implementation
- Risk monitoring and reporting
Risk Management Standards- Global risk management frameworks
- Regulatory and industry standards
Governance- Board responsibilities and oversight
- Internal controls and compliance systems
- Corporate governance structures

PRMIA Exam IV: Case Studies: Standards: Governance, Best Practices and Ethics - 2015 Edition Sample Questions:

Question #1

According to the Northern Rock Case Study, what is Forced Insolvency?

  • A. The bank is legally solvent but if, because it cannot fund its operations, it is forced to liquidate assets it could do so only at less than nominal values (fire sale) and this would make it legally insolvent (value of assets falls below those of liabilities)
  • B. The bank is legally solvent but its current funding costs (which are likely to continue) exceed the average rate of return on its assets and hence it would soon become insolvent as it would be making losses and would eventually exhaust its equity capital
  • C. The bank is solvent in that the current value of its assets (measured at book value) is more than the value of its liabilities; so even if the bank were to liquidate all of its assets it would be able to repay all depositors and other creditors
  • D. The bank is insolvent in that the current value of its assets (measured at book value) is less than the value of its liabilities; thus even if the bank were to liquidate all of its assets it would not be able to repay all depositors and other creditors
Reveal Solution  Discussion  0

Correct Answer: A  🗳️

Question #2

Which of the following was NOT a factor in the WorldCom collapse?

  • A. Unfair pricing to customers
  • B. Accounting abuses
  • C. Over stating actual sales
  • D. Failed corporate governance
Reveal Solution  Discussion  0

Correct Answer: A  🗳️

Question #3

Zheng Zhu wants to open a new PRMIA Chapter in Wuhan, China. He can do this if:

  • A. At least 100 members live within 50 miles
  • B. A local business sponsors the chapter
  • C. All of the above
  • D. Approved by the Board of Directors
Reveal Solution  Discussion  0

Correct Answer: D  🗳️

Question #4

Which of the following are PRMIA Governance Principles?
I. Independence of Key Parties
II. Disclosure and Transparency
III. Internal Validation
IV. Solvency

  • A. I, II and IV only
  • B. I and II only
  • C. I, II and III only
  • D. All are PRMIA Governance Principles
Reveal Solution  Discussion  0

Correct Answer: B  🗳️

Question #5

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, 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
  • B. 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
  • C. 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
  • 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 annual premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability
Reveal Solution  Discussion  0

Correct Answer: A  🗳️

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