Certified Supply Chain Professional (CSCP) Practice Exam

Which type of risk can affect the supply chain due to war and terrorism?

1. Process risks

2. Malfeasance risks

3. Hazard risks

4. Demand risks

The correct answer is: Hazard risks

The type of risk that can affect the supply chain due to war and terrorism is classified as hazard risks. Hazard risks stem from events that are unpredictable and can lead to significant disruptions in the supply chain, including natural disasters, industrial accidents, and geopolitical conflicts such as war and terrorism. These events often result in physical damage to assets, disruption of logistics and transportation networks, and potentially significant impacts on cost and availability of goods and services. Hazard risks are generally outside the control of the organization and require effective risk management strategies, such as developing contingency plans, diversifying suppliers, or investing in insurance, to mitigate their impact on the supply chain. This encompasses the unpredictable nature of such events and emphasizes the importance of preparedness to handle the consequences that may arise from them. In contrast, process risks refer to potential failures in operational procedures, malfeasance risks pertain to misconduct or unethical behavior within the organization, and demand risks involve fluctuations in consumer demand that can impact supply levels. While these are all important types of risks to consider within supply chain management, they do not directly correlate with the disruptions caused specifically by war and terrorism.