L5M2 Practice Exam Questions with Answers Managing Supply Chain Risk Certification

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

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The correct answers are as follows:

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Explanation

1, 3 and 4 are the correct options. Binomial is based on discreate events not continuous and it assumes the events of each trial are independent of one another. This YouTube video explains it all perfectly using the chance that an ice-cream cone is broken. It's a nice memorable example to help you remember what binomial distribution is and how it works: https://www.youtube.com/watch?v=3EZbX2ftCUk - it 's a very memorable example and really helped me. You can also see more info in the cips textbook p.131

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The correct answers are as follows:

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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.

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

This is Greenwashing. Greenwashing is the process of using a good deed to cover up unethical responsibility. See p. 45. In this example Company X has thrown some money at a charity in order to cover up the fact it has child labour issues within the supply chain. See https://en.wikipedia.org/wiki/Greenwashing

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

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This is a 'swap' and is explained on p.94. This is a type of 'hedging' but there is no such thing as 'a hedge'. For a more in-depth look at Swaps see: https://www.mercatusenergy.com/blog/bid/77634/an-introduction-to-airline-fuel-hedging-strategies-swaps

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Trade secrets are used for recipes- they're suitable for confidential information that gives an organisation a competitive edge. For a detailed explanation of the four types of IP cover see p. 64 of the study guide

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The correct answers are as follows:

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Cashflow issues can lead to serious financial problems and the company going bust. Therefore this risk must be treated.

Explanation

Petra should arrange for additional tests to be conducted. This question is based on a real example in the exam. In this scenario there is still significant risk for Petra even if the supplier is testing the materials. The supplier could miss something, or forge the results with disastrous consequences for Petra's customers. Moreover it would severely damage Petra's reputation. Therefore the wise thing would be for Petra to conduct additional tests in-house to ensure they are happy with the products and only then accept them. This could be an audit of 10% of deliveries to ensure compliance. Acceptance Testing is discussed in the textbook on p.70

Explanation

The correct answers are as follows:

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