CPSM CPSM Risk Management & Compliance 1

Question 1

In supply chain risk management, a 'single-source' supplier strategy primarily creates which type of risk?

Accepted Answer

Supply continuity risk

Answer

Relying on a single supplier creates supply continuity risk because any disruption at that supplier—whether due to natural disaster, financial failure, or capacity constraints—directly halts the buyer's supply.

Question 2

Which risk mitigation strategy involves transferring supply risk to a third party through insurance or contractual penalties?

Accepted Answer

Risk transfer

Answer

Risk transfer shifts the financial consequence of a risk event to another party, such as through supplier liability clauses, performance bonds, or supply chain insurance policies.

Question 3

A supply manager is assessing a supplier's financial health. Which metric best indicates a supplier's short-term liquidity?

Accepted Answer

Current ratio

Answer

The current ratio (current assets ÷ current liabilities) measures a supplier's ability to meet short-term obligations, making it the primary indicator of near-term financial viability.

Question 4

What is the primary purpose of the US Foreign Corrupt Practices Act (FCPA) in supply management?

Accepted Answer

To prohibit US companies from bribing foreign government officials to obtain business

Answer

The FCPA prohibits US persons and companies from paying bribes to foreign officials to obtain or retain business, making compliance a critical part of global supplier due diligence.

Question 5

In supply chain risk management, a 'business continuity plan' (BCP) is best described as:

Accepted Answer

A documented strategy to maintain critical operations during and after a disruptive event

Answer

A BCP outlines procedures and resources required to continue essential supply chain functions during disruptions such as natural disasters, cyberattacks, or key supplier failures.

(CPSM) Certified Professional in Supply Management Practice Test

(CPSM) Certified Professional in Supply Management Practice Test

CPSM CPSM Risk Management & Compliance 1