CIPS L5M2 Exam Practice Test Instant Access

Question 1

Which of the following will you put into box 3?

Atransfer

Btreat

Ctolerate

Dterminate

Answer : D

The correct answers are as follows:

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).

Question 2

Which of the following will you put into box 3?

Atolerate

Btransfer

Ctreat

Dterminate

Answer : B

The correct answers are as follows:

Question 3

The CBCI and DBCI are professional qualifications in which area?

Asupply chain management

Bethical business practices

Cenvironmental improvements

Dbusiness continuity

Answer : D

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!

Question 4

Which of the following is not a benefit of having a contingency plan?

Acompetitive advantage

Bincreased staff morale

Cgreater resilience to force majeure events

Dincreased profits

Answer : D

Contingency plans won't increase your profit, but they will do the other three things. This is from p.109-110 of the study guide

Question 5

Which of the following is an example of hedging?

Adual-sourcing

Binsurance

Caudits

Drisk assessments

Answer : B

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.

Question 6

There are three main areas where third party suppliers are used in risk management. What are they?

Acontract negotiations

Bsupply chain management

Ccredit ratings

Drisk auditing

Edisaster recovery

Answer : C, D, E

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.

Question 7

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

Athey will receive a financial pay-out

Bthey will receive operational help from a third party

Cthey will be able to claim on insurance

Dthey will be able to breach any contracts that it has

Answer : B

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

CIPS L5M2 Managing Supply Chain Risk Exam Practice Test