CPPB Risk Management in Procurement 1

Question 1

What is the first step in a formal procurement risk management process?

Accepted Answer

Identifying potential risks that could affect procurement outcomes

Answer

Risk identification—systematically cataloging what could go wrong—must precede any analysis, mitigation planning, or monitoring activities.

Question 2

In public procurement, which bond guarantees that a contractor will complete a project according to contract terms?

Accepted Answer

Performance bond

Answer

A performance bond protects the agency by ensuring the surety will complete the work or compensate the agency if the contractor defaults.

Question 3

Which risk response strategy involves shifting the financial impact of a risk to a third party?

Accepted Answer

Transfer

Answer

Risk transfer moves the financial consequence of a risk—such as through insurance, bonds, or indemnification clauses—to another party.

Question 4

A public agency requires a 5% bid bond from all construction bidders. What is the primary purpose of this requirement?

Accepted Answer

To discourage low-quality bids and ensure the winning bidder will execute the contract

Answer

A bid bond assures the agency that the winning bidder will enter into the contract; if they refuse, the bond compensates the agency for re-solicitation costs.

Question 5

Which of the following is an example of a 'supply chain risk' in public procurement?

Accepted Answer

A geopolitical event disrupting the delivery of critical components

Answer

Supply chain risk refers to disruptions—such as natural disasters, geopolitical instability, or logistics failures—that can prevent suppliers from delivering goods or services.

CPPB - Certified Professional Public Buyer Practice Test

CPPB - Certified Professional Public Buyer Practice Test

CPPB Risk Management in Procurement 1