Podcast
Questions and Answers
Which of the following controls is LEAST likely to effectively mitigate risks in a procuring organization?
Which of the following controls is LEAST likely to effectively mitigate risks in a procuring organization?
- Diversifying the supplier base to reduce reliance on single sources.
- Implementing robust supplier due diligence processes.
- Establishing clear contractual terms and conditions.
- Ignoring potential disruptions to maintain cost efficiency . (correct)
A procurement team discovers a potential new supplier that offers significantly lower prices but has a history of labor disputes. Which risk response strategy would be MOST appropriate in this scenario?
A procurement team discovers a potential new supplier that offers significantly lower prices but has a history of labor disputes. Which risk response strategy would be MOST appropriate in this scenario?
- Transfer: Purchase insurance against potential supply disruptions caused by labor disputes.
- Accept: Proceed with the new supplier to capitalize on cost savings, acknowledging the risk.
- Avoid: Immediately reject the new supplier and continue with the existing, more reliable source.
- Mitigate: Negotiate a contract with clauses addressing labor standards and monitoring mechanisms. (correct)
Which type of procurement risk is MOST directly associated with fluctuations in currency exchange rates?
Which type of procurement risk is MOST directly associated with fluctuations in currency exchange rates?
- Reputational risk
- Compliance risk
- Financial risk (correct)
- Supply disruption risk
A key supplier experiences a major cyberattack, compromising their systems and potentially affecting their ability to fulfill orders. This scenario BEST exemplifies which type of procurement risk?
A key supplier experiences a major cyberattack, compromising their systems and potentially affecting their ability to fulfill orders. This scenario BEST exemplifies which type of procurement risk?
During which stage of a typical supply chain is a business MOST vulnerable to risks associated with raw material scarcity?
During which stage of a typical supply chain is a business MOST vulnerable to risks associated with raw material scarcity?
Which of the following scenarios represents a potential source of supply vulnerability during the transportation stage of a supply chain?
Which of the following scenarios represents a potential source of supply vulnerability during the transportation stage of a supply chain?
Which of the following is the LEAST likely example of an operational procurement risk?
Which of the following is the LEAST likely example of an operational procurement risk?
After identifying and assessing a significant operational risk in procurement, which of the following mitigation strategies would be MOST proactive?
After identifying and assessing a significant operational risk in procurement, which of the following mitigation strategies would be MOST proactive?
Flashcards
Risk Likelihood Reduction
Risk Likelihood Reduction
Controls aimed at decreasing the probability of a risk event.
Risk Impact Reduction
Risk Impact Reduction
Controls focused on minimizing the impact if a risk event occurs.
Exploit Positive Risk
Exploit Positive Risk
Accepting the potential benefits of a risk.
Share Risk
Share Risk
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Supply Risk
Supply Risk
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Compliance Risk
Compliance Risk
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Price Volatility Risk
Price Volatility Risk
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Risk Cycle
Risk Cycle
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Study Notes
- Risk, while unavoidable, can be identified and mitigated to reduce its likelihood or impact.
- Controls can be adopted to mitigate risks in procuring organizations.
- Risk relates to uncertainties with negative (detriment) or positive (advantage) outcomes.
- Organizations must understand procurement risk types to manage uncertainties and challenges.
- Supply chains involve stages and processes from raw materials to end customers.
- Identifying sources of supply vulnerability helps businesses manage risks and build resilience.
- Operational risk in procurement needs identification.
- Mitigation strategies are key to managing operational procurement risk and maintaining smooth operations.
- The risk cycle necessitates identifying and documenting risks at all organizational levels.
- These risks may impact achieving organizational objectives.
- There are six stages in the risk cycle.
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Description
Explore risk management in procurement, emphasizing identification, mitigation, and understanding risk types within supply chains. Learn the stages of the risk cycle and strategies to manage operational risks, ensuring organizational objectives are met. Understand procurement risks, supply vulnerability and mitigation.
