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PRMIA 8004 Exam Syllabus Topics:

SectionWeightObjectives
PRMIA Principles of Good Governance20%- Transparency and disclosure
- Risk appetite and accountability
- Risk governance frameworks
- Board and senior management responsibilities
PRMIA Case Studies50%- Root cause identification
- Historical risk failure analysis
- Application of risk principles to scenarios
- Risk management lessons learned
PRMIA Standards of Best Practice, Conduct and Ethics30%- Compliance with laws and regulations
- Ethical decision-making framework
- Professional integrity and accountability
- Code of professional conduct

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

1. The Fortress Re finite reinsurance model

A) 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
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 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
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


2. The multi-dimensional risk problem at Northern Rock did not include which one of the combinations of the following?

A) LPHI Risk; Business Model; Solvency vs. Liquidity: and Deposit Protection
B) Corporate Governance; Moral Hazard; Role of Government; and Credit Risk
C) Deposit Protection; Moral Hazard; Business Model; and LPHI Risk
D) Business Model; Corporate Governance; Moral Hazard; and Deposit Protection


3. Mary Jones wants the Bylaws of PRMIA to be changed so that people can't join PRMIA unless they meet a set of criteria she has devised with her colleagues. She can do this by getting which of the following approvals:

A) 34 of all Members
B) The Board of Directors and a majority of the Members
C) The Board of Directors, but only if the Blue Ribbon Panel affirms the change
D) The Board of Directors alone


4. PRMIA Governance Principles

A) is a set of recommendations based on research and best practice
B) must be adhered to by all PRMIA member organizations
C) must be adhered to by all financial firms that are PRMIA members
D) must be adhered to by all PRM charter holders


5. Which of the following was not cited within the chain of miscalculations and deferred decisions for the downfall of Fannie Mae and Freddie Mac

A) Extreme exposure to foreign currency exposures and losses from non-US$ mortgages
B) Lawmakers postponed strenghtening regulatory oversight due to partisan infighting
C) They did not raise enough capital to weather the storm as the housing slump expanded
D) Under-management and under-measurement of market and liquidity risk


Solutions:

Question # 1
Answer: B
Question # 2
Answer: B
Question # 3
Answer: B
Question # 4
Answer: A
Question # 5
Answer: A

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