Managing supply risk L5M2 Paper 1

By Admin / September 25, 2024

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**Managing Supply Chain Risk L5M2 Paper *1.
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⏱️Time limit:** 1 hour 30 minutes

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Which of the following accurately defines risk?

Health and safety issues in a workplace

The level of exposure faced by the supply chain

Harmful issues to avoid in the workplace

A degree of uncertainty on an objective

None

Which of the following represent potential dangers or disruptions within a supply chain?

1. Probability of lost sales due to geopolitical threats
2. Transporting chemical containers to the buyer’s warehouse
3. Unsafe warehouse practices
4. Loss of stock due to poor security measures

2 and 4

1 and 4

2 and 3

1 and 2

None

Is it true that assessing an organization's risk appetite is essential before taking any risk?

No, because some risks are less harmful and do not require consideration of the organisation’s risk appetite.

Yes, because risk appetite consideration allows the organisation to understand the sources of risk for proper mitigation

Yes, because considering risk appetite level help the organisation in understanding the level of risk they are comfortable taking.

No, because risk appetite is simply an analysis and documenting of the risk which can be done using a risk register.

None

Is it correct to say that procurement managers must eliminate all risks in their department to achieve profitable trading?

Yes, because any degree of uncertainty can cause negative impact on the organisation’s profitability

No, because other risks are worth taking as they can result in positive consequences

Yes, because if a risk of any kind is not avoided, the organisation’s reputation will be significantly damaged

No, because a risk always result in positive outcomes for the organisation if it is well managed

None

A fire at a transport company's depot destroys its vehicle fleet. Although insurance covers replacements, the company faces immediate challenges in fulfilling customer orders, leading to lost business. This type of loss is referred to as which of the following?

Consequential loss

Direct loss

Standard loss

Positive loss

None

Identify the TWO correct examples of direct loss from the options below.

Loss of future customers

Loss of sales

Stock burnt in fire

Damage to assets

Reputational damage

Which of the following features best define an indirect loss?

1. Indirect loss cannot be easily quantified
2. Indirect loss can be easily documented
3. Indirect loss is difficult to insure against
4. Indirect loss requires a lot of money to insure

1 and 4

2 and 4

1 and 3

2 and 3

None

What type of risk in a supply chain is influenced by factors outside the organization?

Political threats and imbalances

New entrants to the market increasing the intense of industrial competition

Breakdown of information and communications technology (ICT)

Change of legislation and regulations

None

Which of the following could be considered instances of fraud within a supply chain? Choose the three most relevant options.

Having a coffee with the supplier’s manager before a negotiation

Giving money to a procurement officer to influence his decision

Misuse of company assets for personal gain

Setting a high invoice price to get the share of the money paid

Asking probing questions to put more pressure on the supplier

Quoting higher prices to account for costs of production

10.

Can procurement managers significantly contribute to the eradication of fraud within the supply chain?

Yes, because fraud gives organisation an opportunity to implement policies to improve their competitive advantage

No, because subordinates are the only people who can see fraud taking place

No, because procurement managers only needs to focus on the procurement tasks that contributes towards overall business strategy

Yes, because fraud is a source of financial risk for the organisation and must be eliminated at all costs

None

11.

What technological risks might a procurement organization encounter?

1. Under-investment
2. Cyber-crime
3. Ransomware attack
4. Cargo theft

2 and 3

1 and 4

3 and 4

1 and 2

None

12.

What are the two critical conditions that must be present for fraud to take place in the supply chain? Select the TWO that apply.

Effective logistical strategies

Tight security measure

Poor financial controls

Due diligence of suppliers

Motive for fraudulent activities

13.

What challenges might CBEF Manufacturers face when acquiring inputs through their international sourcing strategy?

1. Language and cultural difference
2. Quality issues
3. Higher input prices
4. Exchange rate risk

1 and 3

3 and 4

2 and 4

1 and 4

None

14.

ManCo Inc is a global manufacturing organisation. It has a highly integrated supply chain. All parties are interconnected with the result that data availability and transparency are high. ManCo’s CPO is particularly concerned about the technological risk this approach may cause. Which of the following is such a risk for ManCo?

Economic uncertainty

Global economics

Cyber crime

Labour standards

None

15.

What strategic steps can a procurement manager implement to minimize the impact of currency fluctuations on procurement operations?

1. A buyer can the request to use its own currency
2. Insuring the goods that have to be transported
3. Using a forward exchange contract
4. Avoid fixing the rate of currency

2 and 3

3 and 4

2 and 4

1 and 3

None

16.

What is the main objective of the Sarbanes-Oxley regulations?

1. Investor protection
2. Corporate financial disclosure
3. Clear commercial advertising
4. Product quality

1 and 3

2 and 4

2 and 3

1 and 2

None

17.

Supplier insolvency can significantly impact contract performance. Which of the following are key factors that can lead to a supplier's financial failure? Select the THREE that apply.

High employee retention for the supplier

Low volumes of business from a particular supplier

Fraudulent activities by supplier’s employees

Large fines from failure to comply with regulations

Tight financial controls and corporate governance

Loss of a major customer affecting cash flow

18.

Which financial ratios are used to assess a supplier's ability to meet short-term liabilities with its available current assets, thus determining its financial stability?

1. Profitability ratios
2. Acid test ratio
3. Gearing ratio
4. Current ratio

2 and 3

1 and 4

1 and 3

2 and 4

None

19.

Should employees in the supply chain be encouraged to report unethical behavior through whistle-blowing mechanisms?

No, because there is usually no means of them doing so confidentially

Yes, because they will always know if there is unethical behaviour

Yes, because these staff are more likely to be aware of such malpractices

No, because in many countries this will be illegal as it is confidential information

None

20.

A risk associated with brand reputation can affect which of the following areas within an organization?

Competitors

Compliance

Assets

Positioning

None

21.

Which of the following standards is specifically designed for sustainable procurement practices?

ISO 14001

ISO 31000

ISO 9000

ISO 20400

None

22.

Is it mandatory to include a force majeure clause in every service contract with a supplier?

No, because a force majeure clause limits the liability of the supplier in the event of breach

Yes, because a force majeure states the money that have to be paid by the defaulting party

No, because force majeure clause can only be used in a contract of goods

Yes, because a force majeure will suspend the parties obligation in case of unforeseeable and uncontrollable events

None

23.

What is the contractual clause called that helps reduce the risk of receiving defective products in a supply agreement?

Liability clause

Indemnity clause

Inspection and testing clause

Inspection clause

None

24.

Is the statement correct that model form contracts are popular because they provide extra protections for suppliers?

No, they are popular because they are widely accepted and understood in industries that use them

No, they are popular because it is a legal requirement to use them if available in that industry sector

Yes, in industries that use model form contracts they protect a buyer from all supplier conditions

Yes, in those industries that use model form contracts considerably limit supplier liability

None

25.

Which of the following represent various types of intellectual property protection?

1. Copyright
2. Indemnity
3. Insurance
4. Trademark

2 and 3

1 and 4

1 and 2

3 and 4

None

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3 thoughts on “Managing supply risk L5M2 Paper 1”

felex
October 18, 2024 at 11:35 pm

why isn’t the answer to number 25 1 and 2

Reply
1. Admin
  October 19, 2024 at 11:21 pm
  
  Thank you for reaching out! We appreciate your question regarding why the answer isn’t 1 and 2 for number 25.
  We will look into this further to provide more clarity and ensure our materials are as helpful as possible!
  
  Reply
Bridget
February 16, 2025 at 3:18 pm

Kindly provide explanations to the answers to each question for better understanding.

Reply

Before you begin ✍️ You are about to practice the questions set for Managing Supply Chain Risk L5M2 Paper *1. Please put away any distractions and focus all your efforts on passing. ⏱️Time limit: 1 hour 30 minutes

At the end of your examination practice, you will 📝 View your grade ✅ View the correct answers

NOTE: The answers provided haven't been verified by an official CIPS-affiliated entity, therefore consider discussing your concerns with the instructor or fellow students for clarification.

To begin your exam practice, wait a few seconds for the start button to appear, then tap the START button. "We're rooting for you all the way!" All the best. 😃

Your comment matters to us😊. Please share your experience.

Please proceed to view your grade. Fingers crossed🤗

3 thoughts on “Managing supply risk L5M2 Paper 1”

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Before you begin ✍️

You are about to practice the questions set for
**Managing Supply Chain Risk L5M2 Paper *1.
Please put away any distractions and focus all your efforts on passing.
⏱️Time limit:** 1 hour 30 minutes

At the end of your examination practice, you will
📝 View your grade
✅ View the correct answers

To begin your exam practice,
wait a few seconds for the start button to appear,
then tap the START button.
"We're rooting for you all the way!" All the best. 😃