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NEW QUESTION # 47
What is the purpose of the Sarbanes-Oxley Regulation?
- A. to protect the environment
- B. to ensure high levels of ethical practice with regards to working conditions
- C. to ensure that products that reach the market are fit for purpose
- D. to encourage transparency in financial reporting
Answer: D
Explanation:
Explanation
Sarbanes Oxley Regulations encourages transparency in financial reporting. The regulations came in response to the Enron scandal in 2001 when Enron bosses were falsifying financial records to make the company look better than it was, then the company went bust. The point of Sarbanes Oxley is to ensure that this doesn't happen again- that business leaders report correct financial statements to shareholders. The study guide talks about this on p.42 but I'd recommend also watching this video as it gives a good background to the regulation:
https://www.investopedia.com/terms/s/sarbanesoxleyact.asp
NEW QUESTION # 48
Which of the following will you put into box 5?
- A. insurance
- B. forward contract
- C. outsource
- D. new technology
(Correct)
Answer: D
Explanation:
Explanation
New technology (ie a new web portal or payment mechanism) would help treat this risk.
NEW QUESTION # 49
Which of these is a type of Intellectual Property protection? Select TWO
- A. Patent
- B. Warranty
- C. Trademark
- D. Condition
Answer: A,C
Explanation:
Explanation
Patent and Trademark are types of IP protection. There are 4 in total - the other two are copywrite and trade secret. This is covered on p.63-64 of the study guide
NEW QUESTION # 50
Risk Management is a process with several steps. Which of the following is the last step of the cycle?
- A. identify risks
- B. monitor and review
- C. treat
- D. communicate and consult
Answer: B
Explanation:
Explanation
monitor and review is the last stage. The full cycle is; establish context - identify risks - analyse and evaluate risks - treat -communicate and consult - monitor and review. See p. 142
NEW QUESTION # 51
In which of the following industries is it common to find dedicated resource for risk management?
- A. manufacturing
- B. banking and insurance
- C. agriculture
- D. the public sector
Answer: B
Explanation:
Explanation
Banking and Insurance industries usually have a dedicated resource. This mean people working within the company are dedicated to this role (as opposed to using a third party).
P. 146
NEW QUESTION # 52
Which of the following is an internal risk for a company?
- A. government policy changes
- B. supplier's factory burns down
- C. lack of available personnel
- D. exchange rate fluctuations
Answer: C
Explanation:
Explanation
Lack of personnel is an internal risk- the others are external risks. Internal and external risks is a known topic for the exam so see p.116-117 for more information
NEW QUESTION # 53
A black swan event is what type of occurrence?
- A. an unusual occurrence
- B. an occurrence with a negative outcome
- C. an occurrence with a good outcome
- D. a common occurrence
Answer: A
Explanation:
Explanation
A black swan event is an unusual occurrence - something that is rare. See p.124
NEW QUESTION # 54
In probability theory, the chances of a coin landing on heads would be expressed in what way?
- A. one half
- B. 50-50
- C. 0.5
- D. 50%
Answer: C
Explanation:
Explanation
0.5 - in probability theory, the likelihood of an event is represented as a number between 0 and 1. Therefore this would be written as 0.5. See p. 125
NEW QUESTION # 55
A black swan event is what type of occurrence?
- A. an unusual occurrence
- B. an occurrence with a negative outcome
- C. an occurrence with a good outcome
- D. a common occurrence
Answer: A
Explanation:
Explanation
A black swan event is an unusual occurrence - something that is rare. See p.124
NEW QUESTION # 56
Which of the following will you put into box 1?
- A. environment
- B. strategic
- C. operational
- D. intellectual property
(Correct)
Answer: D
Explanation:
Explanation
The correct answers are as follows:
Table Description automatically generated
NEW QUESTION # 57
Which of the following models would be used to explore internal and external risks to a business?
- A. Porter's 5 Forces
- B. STEEPLE
- C. Poisson Distribution
- D. SWOT
Answer: D
Explanation:
Explanation
SWOT is used for this. S + W is strengths and weaknesses, which are internal risks. O+T are opportunities and threats which are external risks. See p. 12 for more information
NEW QUESTION # 58
There are three main areas where third party suppliers are used in risk management. What are they?
- A. disaster recovery
- B. supply chain management
- C. contract negotiations
- D. risk auditing
- E. credit ratings
Answer: A,D,E
Explanation:
Explanation
3 4 and 5 are the correct answers. This is from p. 79 of the textbook - each of these three areas is then covered in detail throughout chapter 2.2.
NEW QUESTION # 59
Which of the following will you put into box 6?
- A. insurance
- B. forward contract
- C. outsource
- D. new technology
Answer: A
Explanation:
Explanation
Table Description automatically generated
The company should ensure they have the correct levels of Employer's Liability insurance as staff are getting injured. This transfers the risk to the insurance company. (I mean they should probably do something to stop the staff getting hurt too... but this is just an imaginary example question....)
NEW QUESTION # 60
Which of the following is an example of force majeure?
- A. The supplier delivers materials late due to a breakdown
- B. The supplier asks for an uplift in prices
- C. The supplier is under criminal investigation for fraud
- D. The supplier's factory is hit by a hurricane
Answer: D
Explanation:
Explanation
The hurricane is the force majeure event. Natural disasters such as this, or any events outside of the parties' control could be considered force majeure. This is a popular exam topic - see p. 66 in the study guide
NEW QUESTION # 61
A supplier of non-critical items has a low credit score, Which of the following actions should be taken? Select TWO options.
- A. create a risk assessment and mitigation plan
- B. replace the supplier as quickly as possible with a more financially stable supplier
- C. inform the CEO of the company
- D. conduct a benchmarking exercise
Answer: A,D
Explanation:
Explanation
The correct answers are conduct benchmarking and create a risk assessment. This supplier provides low value and low risk products - therefore the fact they have a bad credit rating isn't too much of a risk to your company. It's worth doing a benchmarking exercise to compare their position to others in the market to see if there are any industry-wide trends, and to create a risk assessment and mitigation plan. This could involve working with the supplier to help them improve their credit score, for example by using more favourable payment terms so they have a better cash flow. There's no need to replace them immediately, and there's no need to tell the CEO- they probably have more important things to think about than a singular supplier of non-critical items See p.81
NEW QUESTION # 62
SA 8000 is an alternative to which ISO?
- A. 0
- B. 1
- C. 2
- D. 3
Answer: C
Explanation:
Explanation
SA8000 is Social Accountability, this is an alternative to ISO 20400 which is Sustainable Procurement. This is explained on p.53 of the study guide. ISOs are a popular exam topic, so ensure you know these four mentioned here before the exam
NEW QUESTION # 63
What would happen if a company enacts its Contingency Agreement following a natural disaster?
- A. they will receive operational help from a third party
- B. they will be able to breach any contracts that it has
- C. they will receive a financial pay-out
- D. they will be able to claim on insurance
Answer: A
Explanation:
Explanation
They will receive operational help from a third party is the correct answer. Unlike insurance, a contingency plan provides operational help, not just financial. This could be in providing an emergency workspace, helping to get IT systems back up and running or providing emergency air freight. This is explained on p.91-92 of the study guide
NEW QUESTION # 64
Which of the following will you put into box 5?
- A. Quote in Buyer's Currency
- B. CSR Policy
- C. Force Majeure
- D. Standardise Payment Terms
Answer: B
Explanation:
Explanation
The correct answers are as follows:
Table Description automatically generated
CSR= Corporate Social Responsibility
NEW QUESTION # 65
Which of the following will you put into box 2?
- A. strategic
- B. operational
- C. financial
- D. hazard
(Correct)
Answer: D
Explanation:
Explanation
Table Description automatically generated
NEW QUESTION # 66
Which of the following legal principles means that a person can only claim the value of a loss once, regardless of if they have multiple insurance policies?
- A. contribution
- B. insurable interest
- C. subrogation
- D. utmost good faith
Answer: A
Explanation:
Explanation
This is contribution. An example of this is if you have two insurance policies and are going on a business trip that is cancelled last minute. You can claim on the insurance the value of the trip- but only once. So you can either use one policy and not the other, or you can claim half the value of the trip on both policies. This stops people taking out multiple policies and then claiming on them all to make a profit. Legal Principles of Insurance is a known exam topic - this is from p.100-101 of the study guide
NEW QUESTION # 67
Which of the following will you put into box 7?
- A. audit
- B. monitor
- C. insurance
- D. dual sourcing
Answer: C
Explanation:
Explanation
The correct answers are as follows:
Table Description automatically generated with low confidence
NEW QUESTION # 68
An interconnected supply chain would have what affect on the creation of a risk register?
- A. actions to mitigate one risk, may create a new risk
- B. risks will sit with the procurement team
- C. actions to mitigate risks will require a cross-functional team
- D. risks will be larger
Answer: A
Explanation:
Explanation
Actions to mitigate one risk, may create another risk. This is a direct quote from p. 132
NEW QUESTION # 69
Which of the following FIDIC Contracts would be suitable for a contract for offshore wind projects?
- A. Yellow Book Contract
- B. Measured Term Contract
- C. Construction Contract
- D. Minor Works Contract
Answer: A
Explanation:
Explanation
This is the Yellow Book. This is briefly mentioned on p.74 and can often be missed by students. There is a question in the exam about which type of FIDIC contract can be used for construction projects and this is NOT explained in the study guide - so here is a link to FIDIC so you can revise this before the exam:
https://fidic.org/sites/default/files/FIDIC_Suite_of_Contracts_0.pdf
NEW QUESTION # 70
Which of the following will you put into box 8?
- A. monitor
- B. dual sourcing
- C. insurance
- D. audit
Answer: D
Explanation:
Explanation
The correct answers are as follows:
Table Description automatically generated with low confidence
NEW QUESTION # 71
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CIPS L5M2 (Managing Supply Chain Risk) Certification Exam is a globally recognized certification that assesses the candidate's knowledge and understanding of managing supply chain risks. Managing Supply Chain Risk certification is designed for professionals who are responsible for managing supply chain risks in their organizations. L5M2 exam covers various aspects of supply chain risk management, including identifying, assessing, and mitigating risks.
The Managing Supply Chain Risk certification exam comprises of 60 multiple-choice questions, and candidates are given two hours to complete it. L5M2 exam is computer-based and can be taken at a test center or remotely from the comfort of the candidate's home or office. L5M2 exam is graded on a pass/fail basis, with a minimum score of 70% required to pass.
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