CIPS L5M2 Exam Practice Test Instant Access

Question 1

Which of the following models would be used to explore internal and external risks to a business?

APorter's 5 Forces

BSTEEPLE

CSWOT

DPoisson Distribution

Answer : C

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

Question 2

Fraud committed by an employee within a business is what type of risk?

Ainternal risk

Bexternal risk

Cprocurement risk

Deconomic risk

Answer : A

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

Question 3

Which of the following will you put into box 5?

ACSR Policy

BQuote in Buyer's Currency

CForce Majeure

DStandardise Payment Terms

Answer : D

The correct answers are as follows:

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

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 a component of the Sarbanes-Oxley Regulations?

Aseparation of duties

Bethical business practices

Celimination of bribery

Denvironmental protection

Answer : A

Separation of duties is a key component of the Sarbanes-Oxley Regulations. It ensures businesses are accounting responsibly, and one way to do this is through separation of duties (no one person has complete control of the accounts of a company). See https://www.investopedia.com/terms/s/sarbanesoxleyact.asp and p.42 in the study guide. This piece of legislation does tend to come up in the exam so do revise this topic.

Question 6

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.

A1,2 and 3

B1,3 and 5

C2, 4 and 5

D1,2 and 4

Answer : D

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

Question 7

Rabbit Manufacturing operates several factories which create stuffed animals. As these stuffed animals are mainly bought for children, it is extremely important that the quality of the product is assured, and there are no dangerous or small parts which could become choking hazards. Which of the following are appraisal costs that the company should undertake in order to mitigate the risk of poor quality products entering the market?

Aquality control inspections

Busing a pro-active quality management system

Cintroduce a 0 defect approach

Dstaff training to ensure higher quality products are made

Answer : A

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.

CIPS Managing Supply Chain Risk L5M2 Exam Practice Test