FREE Certified Supply Chain Professional (CSCP) Supply Chain Risk Management Questions and Answers

Question 1

A company identifies that its primary supplier for a critical component is located in a region with high geopolitical instability. To address this vulnerability, the company qualifies an alternative supplier in a different country and splits its orders between the two. This action is an example of which risk response strategy?

Accepted Answer

Risk mitigation

Answer

Risk mitigation involves taking active steps to reduce the likelihood or impact of an identified risk. By diversifying the supplier base across different geographical regions, the company reduces its dependency on a single source and lessens the potential impact of a disruption in one area.

Question 2

When conducting a supply chain risk assessment, a risk matrix is commonly used to prioritize threats. This tool visually plots risks to determine their significance and to focus resources on the most critical ones. What are the two primary dimensions used in a risk matrix?

Accepted Answer

Probability of occurrence and severity of impact

Answer

A risk matrix is a standard tool used to assess and prioritize risks by plotting them on a grid. The two dimensions are the likelihood (or probability) that the risk event will occur and the potential impact (or severity) of the consequences if it does occur. This allows a company to categorize risks and focus on high-probability, high-impact events.

Question 3

Which of the following best defines supply chain resilience?

Accepted Answer

The ability to anticipate, resist, and recover from disruptions to return to an original or more desirable state.

Answer

According to the ASCM Supply Chain Dictionary, supply chain resilience is the ability to anticipate, plan for, and recover from disruptions to maintain functionality. It's not just about speed (agility) or cost (efficiency), but about the capacity to absorb shocks and bounce back.

Question 4

A U.S.-based manufacturer imports key components from a supplier in Japan and pays in Japanese Yen (JPY). The company is concerned that the U.S. Dollar (USD) may weaken against the JPY over the next quarter, which would increase the cost of its imports. Which strategy would be most effective for managing this specific financial risk?

Accepted Answer

Executing a currency hedging contract

Answer

Currency hedging, using financial instruments like forward contracts, is a direct strategy to mitigate foreign exchange (FX) risk. It allows a company to lock in a future exchange rate, thereby protecting itself from unfavorable currency fluctuations and creating cost certainty.

Question 5

A company is developing a formal plan to ensure that it can maintain critical operations, such as order fulfillment and customer service, during and after a major disruption like a fire at its main distribution center. This documented process of planning for recovery is best known as:

Accepted Answer

A Business Continuity Plan (BCP)

Answer

A Business Continuity Plan (BCP) is a proactive plan that outlines the procedures and instructions an organization must follow in the face of a disaster or major disruption to ensure essential functions can continue. Its primary purpose is to maintain operational resiliency.

Certified Supply Chain Professional CSCP Practice Practice Test

Certified Supply Chain Professional CSCP Practice Practice Test

FREE Certified Supply Chain Professional (CSCP) Supply Chain Risk Management Questions and Answers