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NEW QUESTION 10
Which of the following are technological risks to an organisation? Select TWO
- A. supplier management issue
- B. network failure
- C. quality failure
- D. supply chain security issue
- E. cyber-security issue
Answer: B,E
Explanation:
Explanation
Cyber security and network failure are two types of security risks. See.
P. 154. There aren't a lot of questions on chapter 3.4 as it's a very short chapter and a lot of the material is repeated in earlier chapters. A brief look over this chapter is all you'll need before the exam.
NEW QUESTION 11
Which of the following are factors which can lead to a supplier becoming insolvent? Select THREE
- A. a high financial ratio
- B. fraudulent activity
- C. attrition of key employees
- D. increased market share
- E. uncontrolled expenditure
Answer: B,C,E
Explanation:
Explanation
1 2 and 3 are factors which can lead to a supplier becoming insolvent. 4- increased market share is a good thing, as it indicates the supplier is doing better than their rivals. A high financial ratio is also a good thing as it shows they have more assets than debt - so this is not a sign of insolvency. See p.24 for 'Supplier Risks'
NEW QUESTION 12
According to Kid Sadgrove, fraud can take place when four pre-conditions exist. Which of the following is not one of those pre-conditions?
- A. motive
- B. opportunity
- C. access
- D. attractive assets
Answer: C
Explanation:
Explanation
access is not a pre-condition. The other three are. The fourth pre-condition not mentioned is lack of controls.
This is from p.20 of the study guide
NEW QUESTION 13
Fraud committed by an employee within a business is what type of risk?
- A. external risk
- B. procurement risk
- C. economic risk
- D. internal risk
Answer: D
Explanation:
Explanation
This is an internal risk. A procurement risk would be issues with a supplier or contract, and economic risk would be exchange rate fluctuations etc. See p.118 for more information on internal risks- it's a known exam topic
NEW QUESTION 14
Kieran works in the manufacturing industry and his company have just implemented LEAN production processes. Will this increase or decrease the risks in relation to security of supply?
- A. decrease security of supply risks as there will be increased efficiencies
- B. increase security of supply risks as this is a tried and tested risk reducing process
- C. decrease security of supply risks as there is less buffer stock
- D. increase security of supply risks as there is less buffer stock held on site
Answer: D
Explanation:
Explanation
2 'increase security of supply risks as there is less buffer stock held on site' is the correct answer. With Lean manufacturing there is little or no buffer stock held. This means that if a supplier doesn't deliver on time, the whole manufacturing process will have to come to a stop until new supplies arrive. A risk of Lean Manufacturing is that you become too reliant on suppliers, and if there is a scarcity of resources or an issue with the supply chain, you are more exposed. See p.26-27 for more information on Security of Supply Risks.
NEW QUESTION 15
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?
- A. the organisation has completed the risk assessments incorrectly
- B. the organisation has not recorded cause for cultural reasons
- C. this is a mistake - all risk assessments should specify the cause of the risk. He should raise this with his manager
- D. the organisation has a high risk appetite
Answer: B
Explanation:
Explanation
This could be for cultural reasons within the company.
P. 135 states that sometimes causes of risk are not recorded as this could lead to a blame culture within the company.
NEW QUESTION 16
Which of the following is an example of hedging?
- A. dual-sourcing
- B. insurance
- C. risk assessments
- D. audits
Answer: B
Explanation:
Explanation
Insurance is a form of hedging. Hedging is using a financial instrument to offset the potential risk of an adverse loss (p.93) none of the other options mentioned are financial instruments.
NEW QUESTION 17
In an organisation, who is responsible for creating a risk assessment register?
- A. Procurement Manager
- B. Cross-Functional Team
- C. the CEO
- D. Risk Manager / H+S Manager
Answer: B
Explanation:
Explanation
A Cross Functional Team should create a risk register. It shouldn't be the responsibility of one person to do this- more points of view will lead to more risks being identified. Accountability for the Risk Register may however sit with the CEO or a Department Manager. This is explained on p. 132
NEW QUESTION 18
A black swan event is what type of occurrence?
- A. a common occurrence
- B. an occurrence with a negative outcome
- C. an unusual occurrence
- D. an occurrence with a good outcome
Answer: C
Explanation:
Explanation
A black swan event is an unusual occurrence - something that is rare. See p.124
NEW QUESTION 19
Which of the following statements are true about risk management? Select TWO.
- A. the goal of risk management is to reduce risks to 0
- B. risk management is a continuous process
- C. risk management is an activity that is conducted by a business once a year
- D. risk management can help companies ensure the smooth and successful running of purchase and supply operations
- E. risk management is the process by which all risks are either treated or transferred
Answer: B,D
Explanation:
Explanation
The correct responses are 2 and 4: risk management is a continual process and helps companies ensure the smooth and successful running of P+S. These are direct quotes from p.3 of the study guide. The other answers are wrong- if risk management is a continuous process it's not something that is done once a year- so this option is automatically discounted. Option 1 is also wrong as you can never reduce all risks to 0, and option 5 is also wrong- risks can be treated and transferred, but they can also be tolerated and terminated.
NEW QUESTION 20
Which of the following will you put into box 5?
- A. insurance
- B. new technology
(Correct) - C. outsource
- D. forward contract
Answer: B
Explanation:
Explanation
New technology (ie a new web portal or payment mechanism) would help treat this risk.
NEW QUESTION 21
Which of the following is an internal risk for a company?
- A. supplier's factory burns down
- B. government policy changes
- C. exchange rate fluctuations
- D. lack of available personnel
Answer: D
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 22
Robot Ltd manufactures high end robots. A lot of value is tied up in the stock that it holds within its warehouse as each robot is worth several thousand pounds. The company has decided to enlist the services of a third party provider for disaster recovery, to help them shape a plan for if something were to happen to the stock, such as a flood. Is this the correct thing for Robot Ltd to do?
- A. yes- a third party is a cheap option for disaster recovery planning
- B. no- Robot Ltd should create a cross-functional team to draw up the plan as internal stakeholders will understand the risks better than a 3rd party
- C. no - a 3rd party can only help in the solution stage of disaster recovery, not the planning stage
- D. yes- a 3rd party can provide broader experience and expertise
Answer: D
Explanation:
Explanation
The correct answer is 1 - the 3rd party can provide broader experience and expertise. They can advise on best practice and will know how to advise Robot Ltd as they will have experience across a wide range of companies. This is explained on p.91 of the study guide
NEW QUESTION 23
Logistics Risks are caused by...
- A. heightened ethical standards
- B. extended supply chains
- C. customer expectations
- D. economic instability
Answer: B
Explanation:
Explanation
Extended supply chains create logistic risks. This is from p. 29. Types of risks is a popular exam topic but the questions are usually quite straightforward like this.
NEW QUESTION 24
The triple bottom line is a way to refer to sustainability practices. Which of the following is included within the Triple Bottom Line? 1. People, 2. Profit, 3. Price, 4. Planet 5. Power.
- A. 1,2 and 4
- B. 2, 4 and 5
- C. 1,3 and 5
- D. 1,2 and 3
Answer: A
Explanation:
Explanation
Triple Bottom Line - people, profit and planet - options 1, 2 and 4. See p.45 for more details on sustainability
NEW QUESTION 25
Which of the following will you put into box 2?
- A. operational
- B. hazard
(Correct) - C. financial
- D. strategic
Answer: B
Explanation:
Explanation
Table Description automatically generated
NEW QUESTION 26
What is the job of an underwriter?
- A. to evaluate insurance applications
- B. to determine the validity of an insurance claim
- C. to assist a buyer in selecting the correct insurance
- D. to advise required insurance levels for a contract
Answer: A
Explanation:
Explanation
An underwriter evaluates insurance applications. Learn the difference between Insurance Underwriters and Claims Adjusters for the exam - this is a known topic. (A claims adjuster determines the validity of an insurance claim).
NEW QUESTION 27
Which of the following will you put into box 6?
- A. insurance
- B. monitor
- C. audit
- D. dual sourcing
Answer: D
Explanation:
Explanation
The correct answers are as follows:
Table Description automatically generated with low confidence
NEW QUESTION 28
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