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Managing Supply Chain Risk (L5M2)

Module Purpose

On completion of this module, learners will be able to evaluate a variety of tools and techniques to establish the level of risk in supply chains and to recommend and apply ways of avoiding, mitigating, or managing risk.

Module aim(s)

Managing risks is key to any organisation’s strategy. It involves identifying, documenting, and dealing with potential risks relating to its operations. This helps the organisation to run effectively and efficiently, especially since supply chains can be complex therefore susceptible to risks. ESG (Environmental, Social, and Governance) considerations contribute to supply chain risk, so are important to understand in the context of managing supply chain risk. This module is designed to help learners examine the nature and sources of supply chain risk and identify and implement appropriate risk management and mitigation techniques. Learners will undertake risk analysis, consider the advantages of a risk register, and apply a range of risk management tools and techniques appropriate to typical supply chain issues.

Next steps

Starting a CIPS qualification programme means you will join the largest institute in the world for those working in procurement and supply. You can join as a student member online today. Once joined you can book your examinations online


Key Module Details
Core Module
Objective response exam
Exam duration 1.5 hours
Module learning time - 60 hours
6 credits
46 questions in this exam

Learning outcomes, assessment criteria and indicative content

1.0 Understand the nature of risk affecting supply chains

1.1 Analyse the different types of risk that can impact on supply chains

  • 1.1.1 Definition of risks; hazards; exposure; and risk appetite
  • 1.1.2 Categories of risk: financial, strategic, operational, and hazard
  • 1.1.3 ESG (Environmental, Social, and Governance) risks impacting supply chains
  • 1.1.4 Tools for assessing internal and external sources of risk
  • 1.1.5 Positive and negative consequences of risk
  • 1.1.6Direct and indirect losses

1.2 Assess operational risks in supply chains

  • 1.2.1 Contract failure
  • 1.2.2 Financial risks: currency, cash flow and insolvency
  • 1.2.3 Quality failure
  • 1.2.4 Security of supply
  • 1.2.5 Technology
  • 1.2.6 Logistics complexity
  • 1.2.7 Risks in outsourcing and offshoring
  • 1.2.8 ESG (Environmental, Social, and Governance) risks impacting supply chains

1.3 Compare methods for eliminating fraud and corruption in supply chains

  • 1.3.1 Types of corruption
  • 1.3.2 Types of fraud
  • 1.3.3 Governance of fraud and corruption in supply chains
  • 1.3.4 The use of ethical codes including the CIPS Code of Conduct to support the elimination of risk

1.4 Assess the risks in supply chains that can impact on organisational ESG (Environmental, Social, and Governance) considerations

  • 1.4.1 Defining ESG (Environmental, Social, and Governance) considerations in the context of sustainable procurement and supply
  • 1.4.2 How environmental supply chain risks impact organisational ESG (Environmental, Social, and Governance) considerations.
  • 1.4.3 How social supply chain risks impact organisational ESG (Environmental, Social, and Governance) considerations
  • 1.4.4 How governance supply chain risks impact organisational ESG (Environmental, Social, and governance) considerations.
  • 1.4.5 Standards for sustainable procurement: ISO standards, United Nations (UN) and International Labour Organization (ILO), and local sustainability standards

2.0 Understand processes in managing risk in supply chains

2.1 Examine the use of contractual terms to help manage risk in supply chains

  • 2.1.1 Purpose and use of model form contracts in managing supply chain risk
  • 2.1.2 Purpose and development of indemnity and liability clauses in supply chain risk management
  • 2.1.3 Purpose and use of clauses for testing, inspection, and acceptance
  • 2.1.4 Impact of force majeure clauses in managing supply chain risk
  • 2.1.5Global sourcing considerations and compliance to standards

2.2 Analyse the use of third-parties in risk management in supply chains

  • 2.2.1 Use of third-party providers for credit rating, debt factoring, and related business services in managing supply chain risk
  • 2.2.2 Use of third-party providers for auditing risks including ESG risks in supply chains
  • 2.2.3 Use of third-party providers for disaster recovery services

2.3 Assess the use of insurances for supply chain risks

  • 2.3.1 Use of insurance in managing supply chain risk
  • 2.3.2 Legal principles of insurance
  • 2.3.3 Categories of insurance: employers and public liability, professional indemnity, product liability, and trade credit
  • 2.3.4 Insurance claims, underwriting, and supply chain risk management

2.4 Examine the use of contingency plans in response to risks in supply chains

  • 2.4.1 Components of a business continuity plan and disaster recovery plan
  • 2.4.2 Definitions and purpose of disaster recovery and business continuity planning
  • 2.4.3 Importance of reviewing and testing contingency plans

3.0 Understand risk mitigation strategies in supply chains

3.1 Evaluate the use of probability and impact assessments to manage risks in supply chains

  • 3.1.1 Methodologies for assessing the probability and impact of risk
  • 3.1.2 Vulnerability assessments
  • 3.1.3 Collating statistical evidence of risks
  • 3.1.4 Use of probability theory and statistical distribution methods to determine the likelihood of risk

3.2 Analyse and propose how risk assessments and risk registers can mitigate risks in a supply chain

  • 3.2.1 Creation and use of templates for risk assessments and risk registers
  • 3.2.2 Engaging stakeholders in the development and review of risk assessment and registers
  • 3.2.3 Importance of reporting and action plans in risk management

3.3 Explain the development of a risk management culture and strategy to improve supply chains

  • 3.3.1 Developing a strategic approach to risk management
  • 3.3.2 Role of organisation culture in management of supply chain risk
  • 3.3.3 Risk management process and the development of risk management plans
  • 3.3.4 Resource requirements for effective supply chain risk management
  • 3.3.5 Supply chain risk visibility and reporting to stakeholders

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