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  3. L5M2

CIPS L5M2 Exam (page: 2)
CIPS Managing Supply Chain Risk
Updated on: 25-Dec-2025

Viewing Page 2 of 25
L5M2 PDF 120 Questions

Which of the following models would be used to explore internal and external risks to a business?

  1. Porter's 5 Forces
  2. STEEPLE
  3. SWOT
  4. Poisson Distribution

Answer(s): C

Explanation:

SWOT is used for this. S + W is strengths and weaknesses, which are internal risks. O+T are opportunities and threats which are external risks. See p. 12 for more information



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?

  1. holiday fraud
  2. accepting a kick-back
  3. counterfeiting
  4. bribery

Answer(s): 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



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?

  1. Leadership and Learning
  2. Investment and Accountability
  3. Appraisal and Communication
  4. Learning and Information

Answer(s): A

Explanation:

The LILAC Model is; Leadership, Involvement, Learning, Accountability and Communication. P. 149



Which of the following are technological risks to an organisation? Select TWO

  1. cyber-security issue
  2. supply chain security issue
  3. supplier management issue
  4. network failure
  5. quality failure

Answer(s): A,D

Explanation:

Cyber security and network failure are two types of security risks. See. P. 154. There aren't a lot of questions on chapter 3.4 as it's a very short chapter and a lot of the material is repeated in earlier chapters. A brief look over this chapter is all you'll need before the exam.



Maple Tree Limited is a Canadian company who has recently signed a new contract with a supplier who is based in Chin

  1. Maple Tree Limited will be buying a raw material with a reputation for severe price fluctuations.
    Which of the following would help mitigate the risk that this poses? Select TWO options
  2. quote in the supplier's currency
  3. quote in the buyer's currency
  4. use a forward exchange contract
  5. fix the exchange rate at the current rate

Answer(s): C,D

Explanation:

The correct answers are 3 + 4. To mitigate the risk, you want to ensure price stability for the duration of the contract- you don't want the prices to keep going up and down. Therefore options 1 and 2 wouldn't help- the prices would still go up and down regardless of which currency was used for quotes. Using a forward contract, or fixing the exchange rate, however, would give price certainty,

and therefore mitigate the risk. See p.23 for more information on currency risks and how to overcome these



Viewing Page 2 of 25



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