L5M2 Sample Questions Answers

Explanation

changes to import levies is an external risk. Not internal. See p.118-119 for more information on internal risks - this is a popular exam topic. Internal risks are stuff that happens inside a company, external risks are risks from the external environment (whether this is political, economical, weather etc)

Explanation

The correct answers are as follows:

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Cashflow issues can lead to serious financial problems and the company going bust. Therefore this risk must be treated.

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

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The correct answers are as follows:

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The consequences of this risk are huge, therefore the risk should be terminated. This means the cause of the risk is taken away (i.e. the animal testing).

Explanation

This is contribution. An example of this is if you have two insurance policies and are going on a business trip that is cancelled last minute. You can claim on the insurance the value of the trip- but only once. So you can either use one policy and not the other, or you can claim half the value of the trip on both policies. This stops people taking out multiple policies and then claiming on them all to make a profit. Legal Principles of Insurance is a known exam topic - this is from p.100-101 of the study guide

Explanation

A Disaster Recovery Plan is to get critical systems operational following an emergency. This is implemented hours after the event. Option 2 describes Incident Response and Option 3 describes a Business Continuity Plan. Option 4 is made up. These definitions and the timeline of when they're activated is on p.108 of the study guide

Explanation

1, 3 and 4 are the correct options. Binomial is based on discreate events not continuous and it assumes the events of each trial are independent of one another. This YouTube video explains it all perfectly using the chance that an ice-cream cone is broken. It's a nice memorable example to help you remember what binomial distribution is and how it works: https://www.youtube.com/watch?v=3EZbX2ftCUk - it 's a very memorable example and really helped me. You can also see more info in the cips textbook p.131

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The correct answers are as follows:

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The correct answers are as follows:

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Explanation

The correct answer is 'publish a summary of how the directors have engaged with employees'. For more information on this piece of legislation see p. 145

An aging workforce is a strategic risk for the business.

Explanation

3 4 and 5 are the correct answers. This is from p. 79 of the textbook - each of these three areas is then covered in detail throughout chapter 2.2.

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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.

Explanation

The correct order is 2, 1, 3 - this is from p.108 of the study guide: 'The Components of a Business Continuity and Disaster Recovery Plan'.

Explanation

Of these four answers only one is an appraisal cost and that is answer 1. The other three options are prevention costs. There is a table of appraisal costs and prevention costs on p. 26 Appraisal costs are reactive- they're done after the product is manufactured. Preventative costs are actions taken in quality assurance.

Explanation

The risk has been transferred to the insurance company. This question is based on the 4Ts from p.32- this is a popular exam topic, for both the multiple choice questions and the drag and drop

Explanation

ISO 20400 is Sustainable Procurement. This is from p. 51 of the study guide- as well as learning what the ISO numbers are, do also learn the key areas of each ISO as these come up in the exam.

Explanation

A black swan event is an unusual occurrence - something that is rare. See p.124

Explanation

The correct responses are 2 and 4: risk management is a continual process and helps companies ensure the smooth and successful running of P+S. These are direct quotes from p.3 of the study guide. The other answers are wrong- if risk management is a continuous process it's not something that is done once a year- so this option is automatically discounted. Option 1 is also wrong as you can never reduce all risks to 0, and option 5 is also wrong- risks can be treated and transferred, but they can also be tolerated and terminated.

Explanation

quoting in Juan's currency would reduce the risk to Juan - the risk of currency exchange rate fluctuations would then sit with the supplier. See p.23 for more information on currency risks.

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A forward contract would fix the exchange rate at a certain level, allowing for cost certainty. This mitigates the risk of the currency getting any weaker.

Explanation

Indemnity clauses transfer risk from one party to another. It is an arrangement whereby one party promises to compensate the other party for a trigger event. An example of an indemnity clause could be a construction firm is building a new bridge and the project is supposed to be completed by 1st June. An indemnity clause may state that should the bridge not be ready by this date, the construction firm will compensate the buyer by X amount. See p.61 for more information on indemnity.

ExplanationThe correct answers are as follows:

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Explanation

This is the description of treat mentioned on p. 143. The 4 Ts is a popular exam topic

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Explanation

Trade secrets are used for recipes- they're suitable for confidential information that gives an organisation a competitive edge. For a detailed explanation of the four types of IP cover see p. 64 of the study guide

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The correct answers are as follows:

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The correct answers are as follows:

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Cashflow issues can lead to serious financial problems and the company going bust. Therefore this risk must be treated.

Explanation

access is not a pre-condition. The other three are. The fourth pre-condition not mentioned is lack of controls. This is from p.20 of the study guide

Explanation

P. 133 of the study guide says 'it is also possible for organisation to use a quantative method where they quantify the loss in terms of monitory value instead of an impact figure'. Rating 1-5 is incorrect because this is the same as an impact scale. Impact analysis is wrong because this isn't quantative. 4Ts are the ways you can mitigate risks.

Explanation

ISO 28000 is Supply Chain Security Management. This is a known topic for the exam. Learn more about ISOs on p. 141

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The correct answers are as follows:

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Explanation

These are qualifications in business continuity. This comes from p.107 of the study guide. CBCI stands for Certificate of the Business Continuity Institute and DBCI Diploma of the Business Continuity Institute. Once you know what the acronyms stand for, the question is quite easy!