WSET Risk Management & Mitigation 3 — Questions and Answers
Question 1: A négociant concerned about grape supply risk from a single appellation should adopt which procurement strategy?
- Signing exclusive contracts with one domaine only
- Diversifying sourcing across multiple appellations and suppliers (Correct answer)
- Purchasing only at spot market prices each harvest
- Investing exclusively in estate vineyards in one region
Correct answer: Diversifying sourcing across multiple appellations and suppliers
Diversifying sourcing across multiple appellations spreads supply risk so that a poor harvest in one area does not cripple production.
Question 2: In the context of wine law compliance risk, a producer mislabeling a wine's vintage year faces which primary consequence?
- Automatic quality grade upgrade
- Potential fines, market withdrawal, and loss of appellation rights (Correct answer)
- Mandatory blending with the correct vintage
- Temporary suspension of export license only
Correct answer: Potential fines, market withdrawal, and loss of appellation rights
Mislabeling vintage years violates wine law and can result in regulatory fines, product recall, and revocation of appellation or export privileges.
Question 3: A winery operating in an earthquake-prone region should include which element in its business continuity plan?
- Increased barrel char levels
- Structural reinforcement of barrel halls and emergency response protocols (Correct answer)
- Conversion to screwcap closures only
- Reduction of tank fill volumes to 50%
Correct answer: Structural reinforcement of barrel halls and emergency response protocols
Structural reinforcement and emergency protocols address the physical and operational risks specific to earthquake-prone environments.
Question 4: Which approach best protects a wine business against the risk of a single key customer representing over 60% of revenue?
- Offering that customer exclusive product lines
- Actively developing a broader, diversified customer base (Correct answer)
- Reducing production volume to match that customer's orders
- Locking in multi-year supply agreements with only that customer
Correct answer: Actively developing a broader, diversified customer base
Diversifying the customer base reduces dependency concentration risk so that the loss of any one customer does not threaten business viability.
Question 5: In spirits production, 'angel's share' losses during maturation are an example of which category of business risk?
- Regulatory compliance risk
- Operational/inventory shrinkage risk (Correct answer)
- Currency exchange risk
- Reputational risk
Correct answer: Operational/inventory shrinkage risk
Angel's share—alcohol lost to evaporation during barrel aging—is an operational inventory loss that must be factored into production cost planning.
Question 6: A wine producer detecting elevated levels of volatile acidity (VA) in tank during fermentation should immediately:
- Add more sugar to mask the acidity
- Investigate the cause and consider remediation such as blending or treatment (Correct answer)
- Transfer to bottle to halt further development
- Increase fermentation temperature to drive off acidity
Correct answer: Investigate the cause and consider remediation such as blending or treatment
Detecting elevated VA early allows the producer to investigate root causes (e.g., wild yeast, bacterial contamination) and apply corrective actions before the fault becomes irreversible.
Question 7: Which risk management principle is illustrated when a Champagne house maintains a reserve wine library spanning multiple vintages?
- Speculative inventory investment
- Consistency assurance and non-vintage blend risk mitigation (Correct answer)
- Tax deferral strategy
- Reduction of malolactic fermentation risk
Correct answer: Consistency assurance and non-vintage blend risk mitigation
Reserve wines allow Champagne houses to maintain house style consistency across non-vintage blends regardless of annual harvest variation.
WSET Risk Management & Mitigation 3
A négociant concerned about grape supply risk from a single appellation should adopt which procurement strategy?