Free Practice Questions for CIPS L5M2 Exam

Explanation

The hurricane is the force majeure event. Natural disasters such as this, or any events outside of the parties' control could be considered force majeure. This is a popular exam topic - see p. 66 in the study guide

Explanation

Trade secrets are used for recipes- they're suitable for confidential information that gives an organisation a competitive edge. For a detailed explanation of the four types of IP cover see p. 64 of the study guide

Explanation

The correct answers are as follows:

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A force majeure clause within a contract would allow XWY to end any contracts it is unable to fulfil without repercussions if an earthquake were to strike.

An aging workforce is a strategic risk for the business.

Explanation

The correct answers are as follows:

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Explanation

The correct answer is 'no-this is not the purpose of insurance'. The question asks if Professional Indemnity Insurance can be claimed on for this- no it can't- that's not its purpose. It would be Employer's Liability insurance which could be claimed on. This question tests your understanding of the different types of insurance. There is a very similar question in the exam- so remember accidents at work are claimed against Employer's Liability insurance NOT Professional Indemnity insurance - see p.96 for more information on different types of insurance

Explanation

The correct answer is 1 - the 3rd party can provide broader experience and expertise. They can advise on best practice and will know how to advise Robot Ltd as they will have experience across a wide range of companies. This is explained on p.91 of the study guide

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Explanation

Sarbanes Oxley Regulations encourages transparency in financial reporting. The regulations came in response to the Enron scandal in 2001 when Enron bosses were falsifying financial records to make the company look better than it was, then the company went bust. The point of Sarbanes Oxley is to ensure that this doesn't happen again- that business leaders report correct financial statements to shareholders. The study guide talks about this on p.42 but I'd recommend also watching this video as it gives a good background to the regulation: https://www.investopedia.com/terms/s/sarbanesoxleyact.asp

Explanation

Insurance is a form of hedging. Hedging is using a financial instrument to offset the potential risk of an adverse loss (p.93) none of the other options mentioned are financial instruments.