5.4 Chapter 5 Assessment

Conceptual Questions:

1. Section 5.1: Introduction
   • Question: Why is proactive risk management crucial in global supply chains, and how can it provide a competitive advantage?
2. Section 5.2: The Concept of Risk
   • Question: What are the three fundamental concepts associated with risk, and how do they influence risk management decisions?
3. Section 5.3: Balancing the Cost of Risk and the Cost of Managing Risk
   • Question: Why is it important for businesses to balance the cost of risk with the cost of managing risk?
4. Section 5.4: Risk Management Process
   • Question: What is the Risk Priority Number (RPN), and how does it help organizations prioritize risks?
5. Section 5.4.1: Various Risk Management Frameworks
   • Question: How does the ISO 31000 framework guide organizations in managing risks?

Situational Questions:

Situation 1: Imagine you are a supply chain manager for a company that heavily relies on a single supplier for a critical component. Recently, geopolitical tensions have raised concerns about the stability of this supply chain. How would you apply the risk management process to address this potential risk, and which tactic (Elimination, Mitigation, Transfer, Acceptance) would you prioritize? Justify your decision based on the risk’s RPN and your analysis.

Situation 2: Your company has identified the risk of cyberattacks as one of the top concerns in its risk management assessment. You are tasked with developing a strategy to manage this risk. Using the concepts from this chapter, propose a risk management plan that balances the cost of managing the risk with the potential impact of a cyberattack. Which risk tactic would you recommend, and why?