L5M2 Managing Supply Chain Risk Questions and Answers

Explanation

Triple Bottom Line - people, profit and planet - options 1, 2 and 4. See p.45 for more details on sustainability

Explanation

This is ' contingent business interruption ' insurance. This protects you if anything were to happen to your suppliers ' premises. Business Interruption Insurance would cover you if something were to happen to your premises. See p.99

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

Explanation

Indemnity clauses should contain duties of both parties, a monetary limit and a time limit (1 2 and 5). It should also detail what types of costs are covered. These four points are explained on p.61. An indemnity clause doesn ' t necessarily signal a breach in contract, and levels of insurance are not relevant here.

Explanation

This is from ILO- the International Labour Organisation - see p.49 of the textbook. You should recognise all four of these acronyms as they come up in this module UN= United Nations - they have the Guiding Principles, ISO = produce standards for business practices and ETI = Ethical Trading Initiative - they have a base code for labour practices.

Explanation

ISO 20400 is Sustainable Procurement. This is from p. 51 of the study guide- as well as learning what the ISO numbers are, do also learn the key areas of each ISO as these come up in the exam.

Explanation

The correct answer is 3. Firstly you can half the number of responses by looking at the yes / no. The UK Bribery Act is further reaching than the FCPA. Therefore the statement is False. You can therefore discount the options that start with yes. Of the two remaining statements only one of them is true and that is number 3- the Bribery Act extends to third parties and the FCPA does not. Option 4 is incorrect as the Bribery Act DOES account for facilitation payments. Its to FCPA that doesn ' t. This is explained on p. 36 of the study guide

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

Explanation

Actions to mitigate one risk, may create another risk. This is a direct quote from p. 132

Explanation

Act is the final stage. See p.25 for a diagram of the cycle.

Explanation

The correct answers are as follows:

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Explanation

A black swan event is an unusual occurrence - something that is rare. See p.124

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

Explanation

Insurable Interest means that it is not possible to insure someone else ' s factory. The study guide explains that you can only take out insurance where you have at least partial ownership of that risk. Therefore option 3 is also correct as you have a partial risk if something were to happen to your supplier ' s factory. You can take out CBI insurance for this. see p.100-101 for further explanations of Legal Principles of Insurance

Explanation

These are qualifications in business continuity. This comes from p.107 of the study guide. CBCI stands for Certificate of the Business Continuity Institute and DBCI Diploma of the Business Continuity Institute. Once you know what the acronyms stand for, the question is quite easy!

Explanation

Indemnity clauses transfer risk from one party to another. It is an arrangement whereby one party promises to compensate the other party for a trigger event. An example of an indemnity clause could be a construction firm is building a new bridge and the project is supposed to be completed by 1st June. An indemnity clause may state that should the bridge not be ready by this date, the construction firm will compensate the buyer by X amount. See p.61 for more information on indemnity.

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.

Explanation

The correct answers are reputational risks and geopolitical risks. This is according to p. 77 of the study guide. Although I personally feel this is a bit presumptive, painting all ' low-cost ' countries with the same brush (are all ' low-cost countries ' politically unstable and allow dodgy things that will affect your reputation?, this is what the textbook says ...

Explanation

Tolerate is one of the 4 Ts. This is a popular exam question so do learn the 4 Ts: Tolerate, Treat, Transfer and Terminate. See p.32.

Explanation

This is the description of treat mentioned on p. 143. The 4 Ts is a popular exam topic

Explanation

P. 133 of the study guide says ' it is also possible for organisation to use a quantative method where they quantify the loss in terms of monitory value instead of an impact figure ' . Rating 1-5 is incorrect because this is the same as an impact scale. Impact analysis is wrong because this isn ' t quantative. 4Ts are the ways you can mitigate risks.

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

Explanation

The correct answers are as follows:

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Standardised payment terms would help with cashflow. For example every client must pay within 30 days.

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.

Explanation

Poisson Distribution would be used for this. Poisson Distribution predicts the likelihood of an event occurring. This is explained on p. 129 of the study guide but this YouTube video explains it a lot better: https://www.youtube.com/watch?v=zA7fp2s7FlM

Explanation

quoting in Juan ' s currency would reduce the risk to Juan - the risk of currency exchange rate fluctuations would then sit with the supplier. See p.23 for more information on currency risks.

Explanation The correct answers are as follows:

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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

Explanation

Advantages of ISO28000 are competitive advantage and cost savings. The textbook explains that cost savings come through a reduction in security incidents. For more info on ISO28000 see p. 141

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Explanation

Of these four answers only one is an appraisal cost and that is answer 1. The other three options are prevention costs. There is a table of appraisal costs and prevention costs on p. 26 Appraisal costs are reactive- they ' re done after the product is manufactured. Preventative costs are actions taken in quality assurance.

Explanation

The correct answers are as follows:

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The consequences of this risk are huge, therefore the risk should be terminated. This means the cause of the risk is taken away (i.e. the animal testing).

Explanation

The correct answers are as follows:

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