Alex Ltd, a supplier to Lucy plc, has recently failed to deliver raw oat flour for Oatcake manufacture in line with the terms set down in the supply contract between the two companies.
As a result, Lucy plc has had to delay the delivery of products to a major customer, Ted The Staffordshire Bear Stores plc.
For Lucy plc, the failure of Alex Ltd to meet its contractual obligations is an example of?
Select ONE answer:
- Financial risk
- Product risk
- Business risk
- Event risk
Show your workings to arrive at your answer, and explain and justify your reasons:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 4
- Not correct
- Not correct
- Not correct
- Correct == > The failure of a participant in the business’s supply chain (in this case Alex Ltd) to honour their contractual obligations to Lucy plc, is classified as systemic risk which is a specific type of event risk.
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