Certified Supply Chain Professional CSCP Practice CSCP Supply Chain Risk Management 1

Question 1

Which analytical tool is used in supply chain risk management to systematically identify potential failure points, their causes, and their effects on operations?

Accepted Answer

Failure Mode and Effects Analysis (FMEA)

Answer

FMEA (Failure Mode and Effects Analysis) is a structured approach to identifying where and how a process might fail, assessing the severity and likelihood of each failure, and prioritizing corrective actions — making it a core tool in supply chain risk identification.

Question 2

A company shifts 30% of its sourcing from a single overseas supplier to a domestic supplier to reduce exposure to port disruptions. This strategy is best described as:

Accepted Answer

Risk mitigation through geographic diversification

Answer

Splitting sourcing between overseas and domestic suppliers reduces concentration risk tied to a specific geography or logistics route. This is a mitigation strategy — specifically geographic diversification — not avoidance (which would mean exiting the activity entirely) or transfer (shifting liability to another party).

Question 3

In supply chain risk management, what does the term 'risk transfer' most commonly involve?

Accepted Answer

Using insurance or contractual clauses to shift financial exposure to another party

Answer

Risk transfer means shifting the financial consequences of a risk event to a third party — typically through cargo insurance, indemnification clauses, or force majeure provisions in contracts — rather than internalizing the loss.

Question 4

The 'bullwhip effect' is considered a supply chain risk primarily because it:

Accepted Answer

Amplifies demand variability upstream, leading to overproduction, excess inventory, and cash flow stress

Answer

The bullwhip effect describes how small fluctuations in end-customer demand become progressively amplified as orders move upstream through the supply chain. This distortion leads to overproduction, bloated inventories, and wasteful capacity swings — all significant operational risks.

Question 5

Which metric best measures how quickly a supply chain can return to normal operations after a major disruption?

Accepted Answer

Recovery Time Objective (RTO)

Answer

Recovery Time Objective (RTO) defines the maximum acceptable time to restore supply chain operations after a disruption. It is a standard continuity planning metric that guides investment in redundancy and response capabilities.

Certified Supply Chain Professional CSCP Practice Practice Test

Certified Supply Chain Professional CSCP Practice Practice Test

Certified Supply Chain Professional CSCP Practice CSCP Supply Chain Risk Management 1