Certified Supply Chain Professional (CSCP) Practice Exam

Risk costs are associated with which of the following?

1. Employee training expenses

2. Loss of inventory value such as perishing

3. Operational efficiency improvements

4. Costs related to customer acquisition

The correct answer is: Loss of inventory value such as perishing

Risk costs pertain to potential losses that can occur due to uncertainty or adverse events affecting an organization's assets. Among the options provided, the loss of inventory value, such as through perishing, is most directly associated with risk costs. This is because perishable goods, if not managed properly, can lead to significant financial losses due to spoilage or obsolescence. The implications of inventory loss not only impact financial performance but also affect customer satisfaction if products are not available. Employee training expenses, operational efficiency improvements, and costs related to customer acquisition are important for enhancing workforce capabilities, streamlining processes, and driving sales, respectively, but they do not typically fall under the category of risk costs. These categories focus more on investment in growth and efficiency rather than the potential for loss that defines risk costs. Therefore, the direct consequence of inventory loss due to perishable items makes it a clear example of risk costs.