CSCP Supply Chain Risk Management 3

Question 1

A company keeps extra inventory of a critical component to absorb a possible supplier disruption. Which risk response strategy is this?

Accepted Answer

Risk mitigation

Answer

Holding buffer stock lowers the impact of a disruption, so it is a mitigation response.

Question 2

Buying business interruption insurance to cover losses from a factory fire is an example of which risk response?

Accepted Answer

Risk transfer

Answer

Insurance moves the financial consequences of the risk to a third party, which is risk transfer.

Question 3

In a risk probability-impact matrix, which event should usually be given the highest priority?

Accepted Answer

High probability, high impact

Answer

Events that are both likely and severe carry the greatest expected exposure and are addressed first.

Question 4

Which term describes the amount of risk an organization is willing to pursue or accept to meet its objectives?

Accepted Answer

Risk appetite

Answer

Risk appetite is the overall level of risk an organization is willing to take on to reach its goals.

Question 5

After mitigation actions are in place, the risk that still remains is called:

Accepted Answer

Residual risk

Answer

Residual risk is the exposure that is left after risk responses have been carried out.

Certified Supply Chain Professional CSCP Practice Practice Test