Managing Supply Chain Risk L5M2 Exam Study Material

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Managing Supply Chain Risk L5M2 exam study material is helpful in the preparation. Risk management is a central part of an organisation’s strategy. It is a process whereby the organisation will identify, record and then address the risks associated with their activities with the aim of driving out or controlling those risks to the overall benefit of organisational efficiency and effectiveness. The latest Managing Supply Chain Risk L5M2 exam study material is valid. Free CIPS Certification L5M2 exam study material is available below.

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1. Which of the following will you put into box 1?

transfer

treat

tolerate

terminate

2. Zara is a procurement manager who is thinking about working with a new supplier to source buttons for her clothes manufacturing business. Her manager has asked her to do some due diligence on the supplier's financial stability.

What should she do?

use an outsourced third-party credit rating agency

use an outsources third-party risk management consultant

conduct a credit check on the supplier based on the information provided by them in the tender

conduct a risk assessment based on the information provided by the supplier in the tender

3. Which of the following will you put into box 8?

new technology

forward contract

outsource

insurance

4. Petra Ltd is a manufacturer of upmarket baked goods and they have a range which is gluten free and therefore suitable for customers who have an intolerance of wheat. For this reason Petra Ltd is very strict about the ingredients that it sources. It's main supplier has provided written agreement that they will test all ingredients in their processing factory to ensure that they are suitable for the gluten free diet before delivery is made, and once delivery is made the materials will be deemed accepted by the buyer.

Is Petra right to accept this arrangement?

yes- this reduces the risk of unsuitable materials entering Petra's factory

yes- this arrangement places the risk on the supplier rather than Petra

no- Petra should arrange for additional tests to be conducted on the deliveries and only accept them once these tests have been completed

no - this arrangement is unacceptable and Petra should void the contract

5. Which of the following will you put into box 6?

new technology

forward contract

outsource

insurance

6. John is a mid-level manager and has created a risk / reward matrix about four potential opportunities at his company White Ducky Limited. He will present his research to a board meeting next week. He has categorised the four opportunities as the following.

Which of these opportunities should John recommend the board 'consider'? Select TWO.

low risk / high reward

high risk/ high reward

low risk/ low reward

high risk/ low reward

7. Risk should be a 'golden thread' that links all of the organisation's strategies, communications, policies and training. The LILAC model describes how a risk-aware culture can be created.

Which of the following form part of the LILAC model?

Leadership and Learning

Investment and Accountability

Appraisal and Communication

Learning and Information

8. In an organisation, who is responsible for creating a risk assessment register?

the CEO

Procurement Manager

Risk Manager / H+S Manager

Cross-Functional Team

9. Which of the following will you put into box 5?

CSR Policy

Quote in Buyer's Currency

Force Majeure

Standardise Payment Terms

10. Oliver is a procurement manager and he is trying to work out the likelihood that a supplier fails to deliver to the warehouse two days in a row.

Which of the following methodologies should Oliver use?

value at risk

normal distribution

binomial distribution

Poisson Distribution

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11. Which of the following form part of the Stakeholder Salience Model? Select TWO

power

legitimacy

interest

level

attitude

12. What would happen if a company enacts its Contingency Agreement following a natural disaster?

they will receive a financial pay-out

they will receive operational help from a third party

they will be able to claim on insurance

they will be able to breach any contracts that it has

13. Risk Management is a process with several steps.

Which of the following is the last step of the cycle?

identify risks

treat

monitor and review

communicate and consult

14. Which of the following are benefits of ISO28000? Select TWO.

competitive advantage

cost saving

increased market share

decreased legal costs

15. Which of the following will you put into box 5?

CSR Policy

Quote in Buyer's Currency

Force Majeure

Standardise Payment Terms

16. What is ISO28000?

Risk Management

Supply Chain Security

Quality Management

Sustainable Procurement

17. Which of the following statements is true about ISO9001? Select TWO.

it is based on the principle of continuous improvement

it encourages businesses to see quality from the viewpoint of the customer

it aims to ensure sustainability within the supply chain

It complements ISO 20400

it helps businesses to identify areas of potential risk and mitigate these accordingly

18. In which of the following industries is it common to find dedicated resource for risk management?

banking and insurance

agriculture

manufacturing

the public sector

19. Which of the following risks would likely be tolerated by a company?

no risks should be tolerated

opportunities which are low risk and low impact

opportunities which are low risk and high impact

opportunities which are high risk and low impact

20. Fraud committed by an employee within a business is what type of risk?

internal risk

external risk

procurement risk

economic risk

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21. Which of the following statements is true about a Disaster Recovery Plan? Select TWO

it is held at the top level

it contains more detail than a business continuity plan

the focus is to return a company to making a profit after a disaster

it can be structured using a standardised framework

22. Which of the following will you put into box 7?

new technology

forward contract

outsource

insurance

23. Company X is a large manufacturer of cosmetics and household products. It operates in 57 different countries and has large and complex supply chains. The brand's popularity is partly due to the cheap price of the products compared with its competitors and Company X has recently discovered that child labour has been used within its supply chain. In response to this Company X has donated a large amount of money to charity.

What is this an example of?

corporate social responsibility

greenwashing

triple bottom line thinking

business continuity planning

24. Yusef is a new procurement manager at FRD Incorporated. He is looking through the Risk Assessments for his department and notices that the cause of the risk is not identified.

Why might this be?

this is a mistake - all risk assessments should specify the cause of the risk. He should raise this with his manager

the organisation has a high risk appetite

the organisation has not recorded cause for cultural reasons

the organisation has completed the risk assessments incorrectly

25. Which of the following will you put into box 5?

audit

monitor

insurance

dual sourcing

26. Dave is a procurement manager for a chocolate factory who is running a tender to source cocoa from a new supplier. The tender is a huge opportunity for suppliers and the contract would be worth millions of pounds. Dave has passed some information about the tender to one of the bidders in exchange for a free holiday to Barbados.

Which of the following types of fraud has Dave committed?

holiday fraud

accepting a kick-back

counterfeiting

bribery

27. Which of the following statements are true about risk management? Select TWO.

the goal of risk management is to reduce risks to 0

risk management is a continuous process

risk management is an activity that is conducted by a business once a year

risk management can help companies ensure the smooth and successful running of purchase and supply operations

risk management is the process by which all risks are either treated or transferred

28. Chloe is a procurement manager at Ruby Company. She has been asked to join a cross-functional team to review the company's risk appetite, potential risks within the supply chain and brainstorm mitigating actions. Chloe has suggested that the cross-functional team should first draw up a list of potential supply chain risks and potential strategies to overcome the risks.

Is Chloe correct?

yes- the first thing the team should look at are the risks and categorise these by topic

yes- the team should focus on creating a risk register and strategies for mitigating risks as quickly as possible

no- the team should review the company's risk appetite before creating a risk register

no- Chloe should first speak with suppliers before drawing up the list of potential supply chain risks

29. Leo LLP is a company which sources materials internationally, and then sells these on nationally at a small margin. Leo LLP has noted that there is a risk of exchange rate fluctuations making their purchases unviable. The CFO has declared that the only way to mitigate this risk is via hedging and that they should look at price fixing. is this correct?

yes- hedging is the only solution to mitigate the risk of adverse price movements

yes- this reduces the risk to 0

no- Leo LLP could do nothing and increase its prices instead

no- Leo LLP can take out insurance to mitigate this risk

30. Which of the following will you put into box 3?

hazard

financial

strategic (Correct)

operational

Page 4 of 4

31. Which of the following stages would come first within a risk assessment?

evaluate risk

treat risk

monitor risk

analyse risk

32. Which of the following will you put into box 2?

transfer

treat

tolerate

terminate

33. Which of the following are factors which can lead to a supplier becoming insolvent? Select THREE

fraudulent activity

attrition of key employees

uncontrolled expenditure

increased market share

a high financial ratio

34. A black swan event is what type of occurrence?

an occurrence with a good outcome

an occurrence with a negative outcome

a common occurrence

an unusual occurrence

35. Which of the following statements about binomial distribution are true? Select THREE

there are only two outcomes

they are based on continuous events

there is only one outcome per event

each trial has the same probability

the events of one trial will impact on the next one

36. Which of the following are key areas of ISO 26000 Social Responsibility? Select THREE.

organisational governance

quality management

human rights

consumer issues

efficient systems

37. In probability theory, the chances of a coin landing on heads would be expressed in what way?

50%

one half

0.5

50-50

Managing Supply Chain Risk L5M2 Exam Study Material

Managing Supply Chain Risk L5M2 Exam Study Material

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