CPL CPL Risk Management & Business Continuity 2 — Questions and Answers
Question 1: Which of the following is an example of a proactive risk mitigation strategy in logistics?
- Filing insurance claims after a cargo loss
- Conducting supplier audits before awarding contracts (Correct answer)
- Issuing customer apologies after a late delivery
- Analyzing root causes after a warehouse fire
Correct answer: Conducting supplier audits before awarding contracts
Supplier audits conducted before awarding contracts identify risks before they materialize, making them a proactive mitigation approach.
Question 2: In the context of supply chain risk, 'demand variability' refers to:
- Fluctuations in transportation costs
- Unpredictable changes in customer order volumes or patterns (Correct answer)
- Variability in supplier lead times
- Changes in regulatory requirements
Correct answer: Unpredictable changes in customer order volumes or patterns
Demand variability describes the degree to which customer demand fluctuates, creating challenges for inventory planning and capacity management.
Question 3: A company that maintains excess inventory specifically to absorb supply chain disruptions is using which risk strategy?
- Risk avoidance
- Risk transfer
- Buffer stock as a risk hedge (Correct answer)
- Risk elimination
Correct answer: Buffer stock as a risk hedge
Buffer or safety stock acts as a risk hedge by providing inventory cushion to continue operations when supply disruptions occur.
Question 4: Which of the following scenarios best illustrates 'force majeure' in a logistics contract?
- A carrier refusing delivery due to unpaid invoices
- A shipment delayed because of a major hurricane (Correct answer)
- A supplier raising prices due to raw material costs
- A warehouse experiencing a labor strike
Correct answer: A shipment delayed because of a major hurricane
Force majeure refers to extraordinary events beyond a party's control, such as natural disasters, that excuse performance of contractual obligations.
Question 5: The process of identifying, evaluating, and prioritizing risks in a supply chain, followed by applying resources to minimize their impact, is called:
- Supply chain optimization
- Risk management (Correct answer)
- Continuous improvement
- Demand planning
Correct answer: Risk management
Risk management is the structured process of identifying, assessing, and mitigating potential threats to supply chain performance.
Question 6: When evaluating a new offshore supplier, which risk factor specifically relates to potential changes in import duties or trade policies?
- Operational risk
- Financial risk
- Geopolitical and trade policy risk (Correct answer)
- Reputational risk
Correct answer: Geopolitical and trade policy risk
Geopolitical and trade policy risk encompasses the possibility that government actions such as tariff changes or trade restrictions will disrupt supply chains.
CPL CPL Risk Management & Business Continuity 2
Which of the following is an example of a proactive risk mitigation strategy in logistics?