CIPS Exam L4M8 Topic 8 Question 54 Discussion

Actual exam question for CIPS's L4M8 exam

Question #: 54
Topic #: 8

[All L4M8 Questions]

What potential costs could an organization face if it fails to conduct Due diligence effectively?

AExplanation:
Though strong due diligence procurement professionals can assess which suppliers or potential suppliers appear to meet the criteria associated with ethical practice.
Prior to the contract being awarded, strong due diligence can save the organization from the following cost:
1) Cost of reputation
2) Environmental damage
3) Stakeholders dissatisfaction,
4) poor quality and rework
5) Breach of contract
6) Ethical concerns

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Suggested Answer: A

by Casandra at Feb 07, 2025, 06:42 PM

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Suzi

21 days ago

Haha, I can just imagine the procurement team doing the 'due diligence dance' - two steps forward, three steps back. Gotta keep those toes nimble!

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Ruby

3 days ago

User 1

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Alesia

6 days ago

User 2

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Viola

7 days ago

User 1

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Dean

22 days ago

Great answer! Though I have to say, the 'cost of reputation' item is a bit of an understatement. One bad supplier can torpedo an entire company's reputation. Ouch!

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Rasheeda

26 days ago

This is a comprehensive list. The only thing I'd add is the cost of lost opportunities - when you get burned by a bad supplier, it can make you gun-shy about taking risks in the future.

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Ma

3 days ago

I agree, being cautious with suppliers can prevent future risks and losses.

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Jackie

14 days ago

Absolutely, it's important to consider all potential costs when conducting due diligence.

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Lavonda

16 days ago

True, lost opportunities can be a huge cost for organizations.

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Marta

1 months ago

Spot on! This covers all the major potential costs an organization could face if they don't do their due diligence properly. Gotta cover those bases before signing on the dotted line.

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