Verified L5M2 Dumps Q&As - L5M2 Test Engine with Correct Answers
Pass Your L5M2 Dumps as PDF Updated on 2023 With 117 Questions
To prepare for the CIPS L5M2 certification exam, candidates can enroll in training programs that cover the exam syllabus. CIPS offers various training courses that are designed to help candidates prepare for the exam. These courses are delivered by experienced professionals and cover all the essential topics that are included in the exam. Additionally, candidates can also access study materials such as textbooks, revision guides, and practice exams to help them prepare for the exam.
The CIPS L5M2 Certification Exam is an important certification for professionals who are responsible for managing risks in their organizations' supply chains. The certification is highly regarded in the industry and is recognized by leading organizations globally. It demonstrates to employers and peers that the candidate has the knowledge and skills to manage supply chain risks effectively.
NEW QUESTION # 38
Which of the following will you put into box 8?
- A. outsource
- B. new technology
- C. insurance
- D. forward contract
Answer: D
Explanation:
Explanation
Table Description automatically generated
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.
NEW QUESTION # 39
Standard Deviation is the measure of the variation between the values in a range of data. From which of the following could you calculate Standard Deviation?
- A. value at risk
- B. binomial distribution
- C. poisson distribution
- D. normal distribution
Answer: D
Explanation:
Explanation
This is calculated from normal distribution. In normal distribution most of the values are concentrated around the middle of the data set- standard deviation identifies how far a data point is from this average. See p.128 for more information
NEW QUESTION # 40
Which of the following will you put into box 5?
- A. NDA
- B. service credits
- C. Force Majeure
- D. Conformance Specification
Answer: A
Explanation:
Explanation
The correct answers are as follows:
Table Description automatically generated
NEW QUESTION # 41
Which of the following is an internal risk for a company?
- A. exchange rate fluctuations
- B. supplier's factory burns down
- C. lack of available personnel
- D. government policy changes
Answer: C
Explanation:
Explanation
Lack of personnel is an internal risk- the others are external risks. Internal and external risks is a known topic for the exam so see p.116-117 for more information
NEW QUESTION # 42
Which of the following is not an internal risk for a business who imports raw materials from abroad?
- A. loss of customer data
- B. changes to import levies
- C. technology malfunction
- D. procurement fraud
Answer: B
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 # 43
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. the organisation has a high risk appetite
- B. the organisation has not recorded cause for cultural reasons
- C. this is a mistake - all risk assessments should specify the cause of the risk. He should raise this with his manager
- D. the organisation has completed the risk assessments incorrectly
Answer: B
Explanation:
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.
NEW QUESTION # 44
In an emergency situation, put the following phases into chronological order as to when they would be activated 1) disaster recover plan 2) incident response 3) business continuity plan
- A. 3, 1, 2
- B. 1, 2, 3
- C. 1, 3, 2
- D. 2, 1, 3
Answer: D
Explanation:
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'.
NEW QUESTION # 45
Which of the following will you put into box 6?
- A. environment
- B. operational
- C. intellectual property
- D. strategic
Answer: B
Explanation:
Explanation
The correct answers are as follows:
Table Description automatically generated
NEW QUESTION # 46
The UK Companies (Miscellaneous Reporting) Regulations 2018 states that organisations with more than 250 employees must do what?
- A. Publish a summary of how directors have engaged with employees
- B. Demonstrate how they abide by Environmental practices
- C. Provide an annual financial statement
- D. Publish an Anti-Slavery Policy
Answer: A
Explanation:
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
NEW QUESTION # 47
A supplier of non-critical items has a low credit score, Which of the following actions should be taken? Select TWO options.
- A. replace the supplier as quickly as possible with a more financially stable supplier
- B. create a risk assessment and mitigation plan
- C. inform the CEO of the company
- D. conduct a benchmarking exercise
Answer: B,D
Explanation:
Explanation
The correct answers are conduct benchmarking and create a risk assessment. This supplier provides low value and low risk products - therefore the fact they have a bad credit rating isn't too much of a risk to your company. It's worth doing a benchmarking exercise to compare their position to others in the market to see if there are any industry-wide trends, and to create a risk assessment and mitigation plan. This could involve working with the supplier to help them improve their credit score, for example by using more favourable payment terms so they have a better cash flow. There's no need to replace them immediately, and there's no need to tell the CEO- they probably have more important things to think about than a singular supplier of non-critical items See p.81
NEW QUESTION # 48
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. counterfeiting
- C. holiday fraud
- 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 # 49
Which of the following will you put into box 8?
- A. service credits
- B. Force Majeure
- C. NDA
- D. Conformance Specification
Answer: A
Explanation:
Explanation
The correct answers are as follows:
Table Description automatically generated
Service Credits are commonly used in IT contracts. This is where the customer is compensated financially should the system 'go down' for a period.
NEW QUESTION # 50
Which of the following will you put into box 2?
- A. treat
- B. transfer
- C. terminate
- D. tolerate
Answer: A
Explanation:
Explanation
The correct answers are as follows:
Table Description automatically generated
Cashflow issues can lead to serious financial problems and the company going bust. Therefore this risk must be treated.
NEW QUESTION # 51
An indemnity clause should contain which of the following pieces of information 1) duties of both parties 2) a monetary limit 3) insurance levels 4) details of the breach 5) a time limit
- A. 3,4,5
- B. 1,2,5
- C. 2,4,5
- D. 1,3,4
Answer: B
Explanation:
Explanation
Indemnity clauses should contain duties of both parties, a monetary limit and a time limit (1 2 and 5). It should also detail what types of costs are covered. These four points are explained on p.61. An indemnity clause doesn't necessarily signal a breach in contract, and levels of insurance are not relevant here.
NEW QUESTION # 52
Risk should be a 'golden thread' that links all of the organisation's strategies, communications, policies and training. The LILAC model describes how a risk-aware culture can be created. Which of the following form part of the LILAC model?
- A. Learning and Information
- B. Investment and Accountability
- C. Leadership and Learning
- D. Appraisal and Communication
Answer: C
Explanation:
Explanation
The LILAC Model is; Leadership, Involvement, Learning, Accountability and Communication.
P. 149
NEW QUESTION # 53
Fraud committed by an employee within a business is what type of risk?
- A. external risk
- B. procurement risk
- C. economic risk
- D. internal risk
Answer: D
Explanation:
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
NEW QUESTION # 54
Which of the following is an example of hedging?
- A. insurance
- B. dual-sourcing
- C. risk assessments
- D. audits
Answer: A
Explanation:
Explanation
Insurance is a form of hedging. Hedging is using a financial instrument to offset the potential risk of an adverse loss (p.93) none of the other options mentioned are financial instruments.
NEW QUESTION # 55
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. low risk
- B. in default
- C. average risk
- 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 # 56
Which of the following statements is true about ISO9001? Select TWO.
- A. It complements ISO 20400
- B. it is based on the principle of continuous improvement
- C. it encourages businesses to see quality from the viewpoint of the customer
- D. it aims to ensure sustainability within the supply chain
- E. it helps businesses to identify areas of potential risk and mitigate these accordingly
Answer: B,C
Explanation:
Explanation
ISO 9001 is Quality Management- answers 1 and 2 are correct. ISOs are a popular topic on this exam so be sure to revise them - and not only what the names of them are, but also the principles behind each ISO. ISO
9001 is discussed on p. 25 of the CIPS study guide.
NEW QUESTION # 57
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 3
- B. 1,3 and 5
- C. 1,2 and 4
- D. 2, 4 and 5
Answer: C
Explanation:
Explanation
Triple Bottom Line - people, profit and planet - options 1, 2 and 4. See p.45 for more details on sustainability
NEW QUESTION # 58
Which of the following stages would come first within a risk assessment?
- A. analyse risk
- B. treat risk
- C. evaluate risk
- D. monitor risk
Answer: A
Explanation:
Explanation
analyse is the correct answer. The full process is: establish context- identify- analyse - evaluate - treat - monitor and review. This is from p.122
NEW QUESTION # 59
Leo LLP is a company which sources materials internationally, and then sells these on nationally at a small margin. Leo LLP has noted that there is a risk of exchange rate fluctuations making their purchases unviable.
The CFO has declared that the only way to mitigate this risk is via hedging and that they should look at price fixing. is this correct?
- A. yes- hedging is the only solution to mitigate the risk of adverse price movements
- B. no- Leo LLP could do nothing and increase its prices instead
- C. yes- this reduces the risk to 0
- D. no- Leo LLP can take out insurance to mitigate this risk
Answer: B
Explanation:
Explanation
The correct answer is 3 'no Leo LLP could do nothing and increase its prices instead'. Firstly the CFO is wrong. There are other ways to mitigate this risk than hedging- hedging isn't the ONLY thing you can do.
Therefore you automatically need to discount options that begin with yes. Then looking at the options that begin with no, insurance isn't going to help in this situtation. Therefore, by process of elimination you will be left with 'no Leo LLP could do nothing and increase its prices instead'.
This question is taken from p.95 - there is a section here describing alternatives to hedging. When dealing with currency fluctuations, an alternative to fixing a price is to build in a margin on your own prices. This margin acts as a buffer for if prices go up- your price can remain the same. Other alternatives to hedging suggested by CIPS include; negotiating long term contracts, buying out the supplier and ingredient substitution
NEW QUESTION # 60
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. insurable interest
- B. subrogation
- C. contribution
- D. utmost good faith
Answer: C
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 # 61
ISO 31000 is built on 11 guiding principles. Identify THREE of these.
- A. Risk Management should address uncertainty faced by the organisation
- B. Risk Management should take into account company culture
- C. Risk management can create value
- D. Risk Management should be done annually
- E. Risk Management should include only the Departments affected by risk
Answer: A,B,C
Explanation:
Explanation
The first three sentences are true about ISO 31000. The list of the 11 principles are from p. 140. ISO 3100 is a known exam topic.
NEW QUESTION # 62
In probability theory, the chances of a coin landing on heads would be expressed in what way?
- A. one half
- B. 0.5
- C. 50-50
- D. 50%
Answer: B
Explanation:
Explanation
0.5 - in probability theory, the likelihood of an event is represented as a number between 0 and 1. Therefore this would be written as 0.5. See p. 125
NEW QUESTION # 63
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