FREE Certified Supply Chain Professional (CSCP) Supply Chain Risk Management Questions and Answers Flashcards

What is the primary purpose of a supply chain risk register?

Answer: To document identified risks with their likelihood, impact, owner, and planned response

A risk register is the central record of identified risks, their assessment, ownership, and response plans.

A company identifies a minor risk whose mitigation would cost more than the expected loss. Which response strategy is most appropriate?

Answer: Risk acceptance

When mitigation costs exceed the expected loss, accepting the risk (with monitoring) is usually the most economical choice.

A port strike has a 10% probability of occurring and would cause a $500,000 loss. What is its expected monetary value (EMV)?

Answer: $50,000

EMV equals probability multiplied by impact: 0.10 x $500,000 = $50,000.

How does a business continuity plan (BCP) differ from a disaster recovery (DR) plan?

Answer: A BCP keeps critical business functions operating overall, while DR focuses mainly on restoring IT systems and data

Business continuity addresses sustaining critical operations broadly, whereas disaster recovery is typically the IT-focused subset.

What is the main supply risk associated with single sourcing a critical component?

Answer: No alternate source is available if that supplier is disrupted

Single sourcing concentrates dependency, so any disruption at that supplier can halt supply entirely.

Which action is an example of risk transfer?

Answer: Purchasing cargo insurance for international shipments

Insurance shifts the financial consequence of a risk to a third party, which defines risk transfer.

In continuity planning, what does the recovery time objective (RTO) define?

Answer: The maximum acceptable time to restore a process after a disruption

RTO sets the target maximum duration a process can be down before unacceptable consequences occur.