Which of the following will you put into box 6?
A . new technology
B. forward contract
C. outsource
D. insurance
Answer: D
Explanation:
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The company should ensure they have the correct levels of Employer’s Liability insurance as staff are getting injured. This transfers the risk to the insurance company. (I mean they should probably do something to stop the staff getting hurt too… but this is just an imaginary example question….)
Dave is a procurement manager for a chocolate factory who is running a tender to source cocoa from a new supplier. The tender is a huge opportunity for suppliers and the contract would be worth millions of pounds. Dave has passed some information about the tender to one of the bidders in exchange for a free holiday to Barbados.
Which of the following types of fraud has Dave committed?
A . holiday fraud
B. accepting a kick-back
C. counterfeiting
D. bribery
Answer: D
Explanation:
This is an example of bribery. The trip to Barbados is the bribe. For more information on these types of fraud see p.19
Yusef is a new procurement manager at FRD Incorporated. He is looking through the Risk Assessments for his department and notices that the cause of the risk is not identified.
Why might this be?
A . this is a mistake – all risk assessments should specify the cause of the risk. He should raise this with his manager
B. the organisation has a high risk appetite
C. the organisation has not recorded cause for cultural reasons
D. the organisation has completed the risk assessments incorrectly
Answer: C
Explanation:
This could be for cultural reasons within the company. P. 135 states that sometimes causes of risk are not recorded as this could lead to a blame culture within the company.
Which of the following will you put into box 6?
A . audit
B. monitor
C. insurance
D. dual sourcing
Answer: D
Explanation:
The correct answers are as follows:
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Which of the following will you put into box 5?
A . CSR Policy
B. Quote in Buyer’s Currency
C. Force Majeure
D. Standardise Payment Terms
Answer: A
Explanation:
The correct answers are as follows:
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CSR= Corporate Social Responsibility
Fraud committed by an employee within a business is what type of risk?
A . internal risk
B. external risk
C. procurement risk
D. economic risk
Answer: A
Explanation:
This is an internal risk. A procurement risk would be issues with a supplier or contract, and economic risk would be exchange rate fluctuations etc. See p.118 for more information on internal risks- it’s a known exam topic
Risk Management is a process with several steps.
Which of the following is the last step of the cycle?
A . identify risks
B. treat
C. monitor and review
D. communicate and consult
Answer: C
Explanation:
monitor and review is the last stage. The full cycle is; establish context – identify risks – analyse and evaluate risks – treat -communicate and consult – monitor and review. See p. 142
Which of the following are factors which can lead to a supplier becoming insolvent? Select THREE
A . fraudulent activity
B. attrition of key employees
C. uncontrolled expenditure
D. increased market share
E. a high financial ratio
Answer: A,B,C
Explanation:
1 2 and 3 are factors which can lead to a supplier becoming insolvent. 4- increased market share is a good thing, as it indicates the supplier is doing better than their rivals. A high financial ratio is also a good thing as it shows they have more assets than debt – so this is not a sign of insolvency. See p.24 for ‘Supplier Risks’
Which of the following will you put into box 1?
A . transfer
B. treat
C. tolerate
D. terminate
Answer: A
Explanation:
The correct answers are as follows:
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Nothing can be done to change this risk (you can’t stop an earthquake from happening), so you therefore need to transfer the risk to another party, or include for this within a contract.
In which of the following industries is it common to find dedicated resource for risk management?
A . banking and insurance
B. agriculture
C. manufacturing
D. the public sector
Answer: A
Explanation:
Banking and Insurance industries usually have a dedicated resource. This mean people working within the company are dedicated to this role (as opposed to using a third party). P. 146