CIPS L5M2 Practice Exam Questions & Answers

7 Free Questions Last reviewed October 31, 2026 Prepared & Reviewed by the ValidExamDumps Editorial Team

120 Practice Questions (Our Bank)
180 minutes Exam Duration
50% or above Passing Score
Exam Facts

CIPS L5M2 Exam Details

Key details for this exam, checked against the published exam outline

Exam Code
L5M2
Full Name
Managing Supply Chain Risk
Issuing Body
Chartered Institute of Procurement and Supply (CIPS)
Question Format (Our Bank)
Multiple Choice
Delivery
Computer-based
Eligibility
No formal prerequisites required
Validity
3 years
Full Question Set
120 questions Get All Questions
Practice Questions

Free L5M2 Practice Questions

Each question shows the correct answer and an explanation of why it is right

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Question 1 Domain 2 Managing Supply Chain Risk

Rabbit Manufacturing operates several factories which create stuffed animals. As these stuffed animals are mainly bought for children, it is extremely important that the quality of the product is assured, and there are no dangerous or small parts which could become choking hazards. Which of the following are appraisal costs that the company should undertake in order to mitigate the risk of poor quality products entering the market?

Correct Answer A
Explanation

Of these four answers only one is an appraisal cost and that is answer 1. The other three options are prevention costs. There is a table of appraisal costs and prevention costs on p. 26 Appraisal costs are reactive- they're done after the product is manufactured. Preventative costs are actions taken in quality assurance.

Question 2 Domain 5 Managing Ethical Procurement and Supply

What is ISO28000?

Correct Answer B
Explanation

ISO 28000 is Supply Chain Security Management. This is a known topic for the exam. Learn more about ISOs on p. 141

Question 3 Domain 3 Managing Contractual Risk

What is the purpose of an indemnity clause within a contract?

Correct Answer C
Explanation

Indemnity clauses transfer risk from one party to another. It is an arrangement whereby one party promises to compensate the other party for a trigger event. An example of an indemnity clause could be a construction firm is building a new bridge and the project is supposed to be completed by 1st June. An indemnity clause may state that should the bridge not be ready by this date, the construction firm will compensate the buyer by X amount. See p.61 for more information on indemnity.

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Question 5 Domain 2 Managing Supply Chain Risk

Juan is a Spanish business owner who imports several parts from Japan. Juan's business operates in Euros and the parts that he buys from Japan can often take a long time to arrive, this means that the price of the items sometimes fluctuates due to the exchange rate. Which of the following would be the best option for Juan?

Correct Answer B
Explanation

quoting in Juan's currency would reduce the risk to Juan - the risk of currency exchange rate fluctuations would then sit with the supplier. See p.23 for more information on currency risks.

Question 6 Domain 2 Managing Supply Chain Risk

Maple Tree Limited is a Canadian company who has recently signed a new contract with a supplier who is based in Chin

a. Maple Tree Limited will be buying a raw material with a reputation for severe price fluctuations. Which of the following would help mitigate the risk that this poses? Select TWO options

Correct Answer C, D
Explanation

The correct answers are 3 + 4. To mitigate the risk, you want to ensure price stability for the duration of the contract- you don't want the prices to keep going up and down. Therefore options 1 and 2 wouldn't help- the prices would still go up and down regardless of which currency was used for quotes. Using a forward contract, or fixing the exchange rate, however, would give price certainty, and therefore mitigate the risk. See p.23 for more information on currency risks and how to overcome these

Question 7 Domain 2 Managing Supply Chain Risk

Kevin is a consultant who works for himself and is predominantly based at home, except for when he visits clients. He has recently taken on a role advising a client about the feasibility of building a new railway station in a village. Which of the following insurances would be vital for Kevin to take out?

Correct Answer D
Explanation

As a consultant he will need Professional Indemnity insurance. This insurance is for roles that include providing advice, designs and services. Insurances comes up a bit in the exam so revise this from p.96-100

Study Guide

What the CIPS L5M2 Exam Covers

Exam domains verified against the Official CIPS L5M2 exam guide, last checked October 2026.

Domain 1 Managing Teams and Individuals

This portion examines various management philosophies and the rationale behind different approaches to self-management, as well as the management of individuals and teams within organizational structures. Understanding team dynamics and individual management approaches is essential for implementing risk management strategies across the supply chain.

Domain 2 Managing Supply Chain Risk

This segment explores diverse methodologies and strategies for assessing risk levels in supply chains. You will learn to evaluate tools and techniques for identifying supply chain vulnerabilities and learn how to document risks in a structured manner through risk registers and similar frameworks.

Sample questions from this domain above Q1Q5Q6Q7

Domain 3 Managing Contractual Risk

This area evaluates legal and procedural aspects related to contract formation and the legal consequences of non-compliance. Candidates examine how contractual terms can mitigate or introduce risks and understand the implications of breaches on organizational operations.

Sample question from this domain above Q3

Domain 4 Advanced Contract and Financial Management

This section focuses on creating measures to ensure and enhance contract performance. It examines strategic sourcing approaches and financial controls that reduce supply chain risk and support organizational objectives.

Sample question from this domain above Q4

Domain 5 Managing Ethical Procurement and Supply

This portion explains the effects of and efforts to improve sustainability. It covers managerial strategies to promote ethical practices in procurement and supply processes and how ethical lapses create reputational and operational risks.

Sample question from this domain above Q2

FAQ

L5M2 Exam FAQ

Common questions about the exam itself

What is L5M2 Managing Supply Chain Risk and where does it fit in CIPS qualifications?
L5M2 is a core module of the CIPS Level 5 Advanced Diploma in Procurement and Supply, which is the advanced level of CIPS qualifications leading toward Chartered Member status. It sits above Level 4 qualifications and focuses specifically on identifying and managing risks across complex supply chain environments.
Do I need any prerequisites before taking L5M2?
CIPS does not publicly state mandatory prerequisites for L5M2, though most candidates have completed lower level CIPS qualifications first. You must be registered as a CIPS student member to book the exam.
How much study time should I allow for L5M2?
CIPS recommends 335 hours of self-study for the Level 5 Advanced Diploma as a whole. Individual candidates report taking anywhere from 8 to 12 weeks of focused preparation depending on their background and prior procurement experience.
What makes L5M2 harder than lower level CIPS exams?
L5M2 requires you to apply risk management concepts to complex real-world scenarios rather than simply recall facts. The exam uses Short Scenario questions that test your ability to analyze supply chain situations and recommend appropriate risk mitigation strategies.
Which topic area in L5M2 do candidates find most challenging?
Managing Contractual Risk often presents challenges because it requires understanding both legal frameworks and practical supply chain implications. Candidates need to grasp how contract clauses protect against or expose the organization to supply chain disruption.
How is the L5M2 exam structured and what should I expect on exam day?
The exam is computer-based with multiple choice questions and Short Scenario questions that require extended written responses. You will need to demonstrate your ability to analyze situations and justify recommendations rather than simply select answers.
Can I retake L5M2 if I do not pass on my first attempt?
Yes, you can retake L5M2. CIPS offers five exam opportunities each year in March, May, July, September, and November, so you can schedule a resit when you feel ready.
How long does the L5M2 certification stay valid and do I need to renew it?
CIPS does not publish an expiry date for the L5M2 qualification itself. Once you pass the exam and achieve the Level 5 Advanced Diploma, the qualification remains on your record, though maintaining Chartered Member status through CIPS involves ongoing professional development.
What job roles typically pursue L5M2 and how does it prepare me for them?
L5M2 is aimed at supply chain managers, procurement managers, and senior operations professionals who need to assess and mitigate organizational risks. The module equips you to lead risk management initiatives and make strategic decisions about supplier relationships and contractual arrangements.
How does L5M2 relate to other Level 5 CIPS modules?
L5M2 is one of ten possible Level 5 modules and is often taken alongside other core and elective modules. It complements modules like L5M1 (Strategic Procurement and Supply) and L5M4 (Managing Procurement and Supply Transactions) by providing the risk management perspective across supply chain operations.

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