CLA Risk Management & Regulatory Compliance 1 — Questions and Answers
Question 1: Supply chain risk management (SCRM) begins with which foundational step?
- Identifying and mapping potential risks across the entire supply chain (Correct answer)
- Purchasing supply chain disruption insurance
- Reducing the number of active suppliers to cut costs
- Implementing a new TMS to improve visibility
Correct answer: Identifying and mapping potential risks across the entire supply chain
Effective SCRM starts with a comprehensive risk assessment that identifies vulnerabilities at each node and link of the supply chain before mitigation strategies are developed.
Question 2: A business continuity plan (BCP) in logistics is designed to:
- Ensure critical supply chain operations can continue or recover quickly after a disruptive event (Correct answer)
- Maximize carrier rate discounts during high-volume periods
- Standardize warehouse picking methods across all facilities
- Reduce product returns through better packaging design
Correct answer: Ensure critical supply chain operations can continue or recover quickly after a disruptive event
A BCP documents the procedures, resources, and responsibilities needed to maintain or restore logistics operations after events such as natural disasters or supplier failures.
Question 3: Incoterms (International Commercial Terms) published by the ICC primarily define:
- The responsibilities, costs, and risk transfer points between buyer and seller in international trade (Correct answer)
- Customs duty rates for specific product categories
- Carrier liability limits for ocean freight
- Safety regulations for hazardous material shipments
Correct answer: The responsibilities, costs, and risk transfer points between buyer and seller in international trade
Incoterms provide standard three-letter codes (e.g., FOB, CIF, DDP) that specify who pays for freight, insurance, and customs, and exactly where risk transfers from seller to buyer.
Question 4: The Customs-Trade Partnership Against Terrorism (C-TPAT) program in the US requires participating importers to:
- Implement supply chain security measures and validate the security practices of their foreign partners (Correct answer)
- Pay lower customs duties in exchange for faster clearance
- Use only US-flagged vessels for ocean imports
- File all customs entries 48 hours before vessel departure
Correct answer: Implement supply chain security measures and validate the security practices of their foreign partners
C-TPAT is a voluntary CBP program that provides trade benefits to companies that meet strict supply chain security standards and vet their overseas partners.
Question 5: The Harmonized System (HS) code is used in international trade to:
- Classify products for customs purposes and determine applicable duty rates (Correct answer)
- Calculate insurance premiums for ocean cargo
- Identify approved carriers for government freight contracts
- Measure on-time delivery performance across trade lanes
Correct answer: Classify products for customs purposes and determine applicable duty rates
HS codes are internationally standardized numerical codes assigned to every product category, used by customs authorities worldwide to levy duties and collect trade statistics.
Question 6: Which type of supply chain risk arises from a single-source supplier being unable to deliver due to a natural disaster or facility fire?
- Supply disruption risk (Correct answer)
- Demand variability risk
- Currency fluctuation risk
- Compliance risk
Correct answer: Supply disruption risk
Supply disruption risk materializes when a supply source is unexpectedly interrupted, making single-sourced items especially vulnerable to catastrophic supply failure.
CLA Risk Management & Regulatory Compliance 1
Supply chain risk management (SCRM) begins with which foundational step?