The Most Proactive Risk Management Activity Involves

question 131

Multiple Choice

The most proactive risk management activity involves

• A) Diversifying the supply base
• B) Identifying backup suppliers
• C) Developing a risk management plan
• D) Utilizing a supply chain IT system

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Definitions:

A Credit Rating

This is an evaluation of the credit risk of a prospective debtor, predicting their ability to pay back the debt and an implicit forecast of the likelihood of the debtor defaulting.

Note

Unsecured debt, usually with a maturity under 10 years.

Protective Covenant

A clause in a financial contract that restricts certain actions of the borrower to protect the lender's interests.

Liquidity Premium

The additional return investors demand for holding a security that is not easily convertible into cash without loss of value.