CIPS L5M2 Daily Practice Exam New 2023 Updated 117 Questions
Use Valid L5M2 Exam - Actual Exam Question & Answer
The Managing Supply Chain Risk certification exam is based on the CIPS Global Standard for Procurement and Supply, which is a comprehensive framework that covers all aspects of procurement and supply chain management. The L5M2 certification exam specifically focuses on the area of supply chain risk management, including identifying, assessing, and mitigating risks in the supply chain.
CIPS L5M2 Managing Supply Chain Risk exam is a challenging but rewarding test that provides a valuable credential for those seeking to advance their careers in supply chain management. By passing the exam, candidates demonstrate their expertise in managing risk in the supply chain, which is a critical skill in today's complex and rapidly evolving business environment.
NEW QUESTION # 43
The triple bottom line is a way to refer to sustainability practices. Which of the following is included within the Triple Bottom Line? 1. People, 2. Profit, 3. Price, 4. Planet 5. Power.
- A. 1,2 and 4
- B. 1,3 and 5
- C. 1,2 and 3
- D. 2, 4 and 5
Answer: A
Explanation:
Explanation
Triple Bottom Line - people, profit and planet - options 1, 2 and 4. See p.45 for more details on sustainability
NEW QUESTION # 44
Which of the following statements about binomial distribution are true? Select THREE
- A. there is only one outcome per event
- B. the events of one trial will impact on the next one
- C. each trial has the same probability
- D. they are based on continuous events
- E. there are only two outcomes
Answer: A,C,E
Explanation:
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
NEW QUESTION # 45
Controlling a risk through the development of actions that can minimise the impact the organisation will suffer as a result of the risk event is known as what control?
- A. transfer
- B. terminate
- C. tolerate
- D. treat
Answer: D
Explanation:
Explanation
This is the description of treat mentioned on p. 143. The 4 Ts is a popular exam topic
NEW QUESTION # 46
Which of the following will you put into box 7?
- A. audit
- B. insurance
- C. monitor
- D. dual sourcing
Answer: B
Explanation:
Explanation
The correct answers are as follows:
Table Description automatically generated with low confidence
NEW QUESTION # 47
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. bribery
- B. holiday fraud
- C. counterfeiting
- D. accepting a kick-back
Answer: A
Explanation:
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
NEW QUESTION # 48
Which organisation created the Decent Work Agenda?
- A. ISO
- B. ILO
- C. UN
- D. ETI
Answer: B
Explanation:
Explanation
This is from ILO- the International Labour Organisation - see p.49 of the textbook. You should recognise all four of these acronyms as they come up in this module UN= United Nations - they have the Guiding Principles, ISO = produce standards for business practices and ETI = Ethical Trading Initiative - they have a base code for labour practices.
NEW QUESTION # 49
In which of the following industries is it common to find dedicated resource for risk management?
- A. manufacturing
- B. banking and insurance
- C. the public sector
- D. agriculture
Answer: B
Explanation:
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
NEW QUESTION # 50
Which of the following will you put into box 7?
- A. insurance
- B. forward contract
- C. new technology
- D. outsource
Answer: D
Explanation:
Explanation
Table Description automatically generated
NEW QUESTION # 51
Neruda Incorporated is evaluating potential suppliers' financial standings as part of a tender. Which of the following companies is the most financially stable?
- A. Company D has high liquidity, low gearing and lots of fixed assets
- B. Company A has a high gearing ratio, high liquidity and few fixed assets
- C. Company C has low liquidity, low gearing and increasing sales trend
- D. Company B has low liquidity, a high gearing ratio and increasing sales trends
Answer: A
Explanation:
Explanation
Company D is the strongest. You want a company with high liquidity (this means they can easily pay any debts) and low gearing (meaning that their company isn't financed by debt). This question comes from p.24 of the CIPS study guide. It doesn't go into a lot of detail on financial ratios and gearing, as this was covered in Level 4. If you're rusty on financial ratios and gearing I recommend revising these before the exam.
NEW QUESTION # 52
Which of the following legal principles means that a person can only claim the value of a loss once, regardless of if they have multiple insurance policies?
- A. contribution
- B. insurable interest
- C. utmost good faith
- D. subrogation
Answer: A
Explanation:
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
NEW QUESTION # 53
Which of the following FIDIC Contracts would be suitable for a contract for offshore wind projects?
- A. Measured Term Contract
- B. Yellow Book Contract
- C. Minor Works Contract
- D. Construction Contract
Answer: B
Explanation:
Explanation
This is the Yellow Book. This is briefly mentioned on p.74 and can often be missed by students. There is a question in the exam about which type of FIDIC contract can be used for construction projects and this is NOT explained in the study guide - so here is a link to FIDIC so you can revise this before the exam:
https://fidic.org/sites/default/files/FIDIC_Suite_of_Contracts_0.pdf
NEW QUESTION # 54
The CBCI and DBCI are professional qualifications in which area?
- A. supply chain management
- B. environmental improvements
- C. business continuity
- D. ethical business practices
Answer: C
Explanation:
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!
NEW QUESTION # 55
A financial instrument used by airlines to fix the price of fuel over a period of time is known commonly as a what?
- A. hedge
- B. exchange
- C. commodity
- D. swap
Answer: D
Explanation:
Explanation
This is a 'swap' and is explained on p.94. This is a type of 'hedging' but there is no such thing as 'a hedge'. For a more in-depth look at Swaps see:
https://www.mercatusenergy.com/blog/bid/77634/an-introduction-to-airline-fuel-hedging-strategies-swaps
NEW QUESTION # 56
Which of the following is not an internal risk for a business who imports raw materials from abroad?
- A. technology malfunction
- B. procurement fraud
- C. changes to import levies
- D. loss of customer data
Answer: C
Explanation:
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)
NEW QUESTION # 57
A large multi-national corporation has just been awarded a credit rating of C by the three main credit rating agencies. What does this score signify?
- A. average risk
- B. low risk
- C. in default
- D. substantial risk
Answer: D
Explanation:
Explanation
a C grade = substantial risk. This is based on the grading system of AAA-D and is explained on p. 80.
basically anything that isn't an A is bad.
NEW QUESTION # 58
Kieran works in the manufacturing industry and his company have just implemented LEAN production processes. Will this increase or decrease the risks in relation to security of supply?
- A. decrease security of supply risks as there will be increased efficiencies
- B. increase security of supply risks as there is less buffer stock held on site
- C. decrease security of supply risks as there is less buffer stock
- D. increase security of supply risks as this is a tried and tested risk reducing process
Answer: B
Explanation:
Explanation
2 'increase security of supply risks as there is less buffer stock held on site' is the correct answer. With Lean manufacturing there is little or no buffer stock held. This means that if a supplier doesn't deliver on time, the whole manufacturing process will have to come to a stop until new supplies arrive. A risk of Lean Manufacturing is that you become too reliant on suppliers, and if there is a scarcity of resources or an issue with the supply chain, you are more exposed. See p.26-27 for more information on Security of Supply Risks.
NEW QUESTION # 59
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