Certification in Supplier Diversity Practice Exam

What is typically included in a risk assessment framework?

1. Individual employee preferences

2. Market size and growth estimates

3. Attributes of supplier relations and interactions

4. Only financial performance of suppliers

The correct answer is: Attributes of supplier relations and interactions

A risk assessment framework is designed to identify, analyze, and mitigate potential risks that could affect an organization's supply chain, including supplier relationships. This framework typically includes evaluating the attributes of supplier relations and interactions. Understanding these attributes helps organizations assess how suppliers communicate, collaborate, and comply with contractual obligations, which are critical for managing risks effectively. Attributes of supplier relations and interactions encompass aspects such as communication styles, responsiveness to issues, trustworthiness, and the overall quality of the relationship. By focusing on these elements, organizations can proactively identify potential risks in their supply chain, such as disruptions in service or quality control issues, allowing them to develop strategies to mitigate those risks. This contrasts with individual employee preferences, which may play a peripheral role in supplier evaluation but do not constitute a core component of risk assessment. Market size and growth estimates tend to inform strategic planning rather than direct risk management. Evaluating only the financial performance of suppliers excludes other significant risk factors, such as operational or reputational risks stemming from the supplier relationship itself.