Product Description Risk Assessment & Management 3 — Questions and Answers
Question 1: A product description includes the phrase 'waterproof' for a watch rated only water-resistant to 30m. Which risk is most directly triggered?
- Misrepresentation and consumer fraud risk (Correct answer)
- Exchange rate risk
- Inventory obsolescence risk
- Supplier risk
Correct answer: Misrepresentation and consumer fraud risk
'Waterproof' and 'water-resistant' have distinct legal meanings; using the wrong term constitutes misrepresentation that can result in FTC action and chargebacks.
Question 2: What is the primary purpose of a risk register in the context of managing product descriptions?
- To track competitor pricing
- To document identified risks, their likelihood, impact, and assigned owners (Correct answer)
- To store product images
- To calculate shipping costs
Correct answer: To document identified risks, their likelihood, impact, and assigned owners
A risk register is a living document that captures each identified risk, its probability, potential impact, and the person responsible for managing it.
Question 3: A product listing boasts '1 million sold!' without verifying the figure. Which risk management principle is being violated?
- Substantiation principle (Correct answer)
- Diversification principle
- Hedging principle
- Escalation principle
Correct answer: Substantiation principle
FTC guidelines require that advertising claims, including sales statistics, be substantiated by credible evidence before publication.
Question 4: A brand sells CBD products online and includes health benefit claims in the product description. The highest risk stems from:
- Poor SEO optimization
- FDA classification of CBD as an unapproved drug when health claims are made (Correct answer)
- Slow page load times
- Low-resolution product images
Correct answer: FDA classification of CBD as an unapproved drug when health claims are made
The FDA has issued warning letters to CBD sellers making disease or health benefit claims, treating such products as unapproved drugs.
Question 5: In risk management terms, reviewing all product descriptions before a major holiday sales push is an example of:
- Reactive risk management
- Proactive (preventive) risk control (Correct answer)
- Risk transference
- Residual risk acceptance
Correct answer: Proactive (preventive) risk control
Reviewing descriptions before high-traffic periods identifies and corrects issues proactively, preventing losses before they occur.
Question 6: A product description fails to mention that a blender does not include a travel lid sold separately. What customer-facing risk does this create?
- Return and chargeback risk due to unmet expectations (Correct answer)
- Data breach risk
- Supplier insolvency risk
- Foreign exchange risk
Correct answer: Return and chargeback risk due to unmet expectations
When customers receive less than what they believed they were buying, they are more likely to return the product or file a chargeback with their bank.
Question 7: Which of the following best defines 'residual risk' in product description management?
- Risks that have been fully eliminated
- Risks that remain after all mitigation measures have been applied (Correct answer)
- Risks only applicable to physical products
- Risks associated with residual chemicals in products
Correct answer: Risks that remain after all mitigation measures have been applied
Residual risk is what remains after you have implemented controls; no mitigation strategy eliminates 100% of risk.
Product Description Risk Assessment & Management 3
A product description includes the phrase 'waterproof' for a watch rated only water-resistant to 30m.
Which risk is most directly triggered?