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CPSM Risk Management & Compliance Flashcards

7 cards from real CPSM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 CPSM Risk Management & Compliance flashcards as text

  1. A supply manager identifies that a sole-source supplier is located in a region prone to political instability. Which risk mitigation strategy is MOST appropriate?

    Answer: Qualify an alternative supplier in a different region

    Qualifying an alternative supplier in a different region directly reduces the concentration risk associated with sole-sourcing from a politically unstable area.

  2. Under the U.S. Foreign Corrupt Practices Act (FCPA), which of the following is classified as a permissible payment?

    Answer: Facilitating payments to expedite routine government actions

    The FCPA historically recognized a narrow exception for facilitating (grease) payments to expedite routine, non-discretionary government actions, though this exception is very limited and many companies prohibit them anyway.

  3. Which document formally records identified supply chain risks, their likelihood, potential impact, and assigned owners?

    Answer: Risk register

    A risk register is the centralized log used to track risks, their attributes (likelihood, impact), mitigation strategies, and responsible owners throughout the risk management process.

  4. A company discovers its Tier 2 supplier uses conflict minerals from a restricted region. Which compliance framework MOST directly governs this situation for U.S. public companies?

    Answer: Dodd-Frank Section 1502 conflict minerals rule

    Dodd-Frank Section 1502 requires U.S. public companies to disclose their use of conflict minerals (tin, tantalum, tungsten, gold) originating from the Democratic Republic of Congo and adjoining countries.

  5. In a risk heat map, a risk rated HIGH likelihood and LOW impact would typically be placed in which quadrant?

    Answer: Monitor — track regularly but not a top priority

    High-likelihood, low-impact risks fall in the 'monitor' zone where they warrant regular tracking but do not demand the same urgent response as high-impact risks.

  6. A supplier's financial health is deteriorating. Which early warning indicator is MOST useful for detecting impending supplier insolvency?

    Answer: A rising accounts payable days outstanding (DPO) trend

    A rising DPO trend indicates the supplier is taking longer to pay its own creditors, which is a classic warning sign of cash flow stress and potential insolvency.

  7. Which risk response strategy involves shifting the financial consequences of a risk to a third party while retaining ownership of the risk?

    Answer: Risk transfer

    Risk transfer moves the financial burden of a risk to another party (e.g., through insurance or contract indemnification clauses) without eliminating the risk itself.