When an organization faces unexpected disruptions, such as the inability to receive raw materials due to a military conflict, it should have contingency plans in place to manage such risks.
Contingency Planning for Unforeseen Events (Correct Answer: C)
Contingency plans are designed to prepare for and respond to unexpected disruptions, such as supply chain failures, political instability, or natural disasters.
IIA Standard 2120 – Risk Management requires organizations to have business continuity and disaster recovery plans, which include contingencies for supply chain disruptions.
A well-prepared contingency plan could involve alternative suppliers, stockpiling critical materials, or adjusting production schedules.
Why the Other Options Are Incorrect:
A. Just-in-time (JIT) delivery plans (Incorrect)
JIT is a supply chain management strategy that minimizes inventory and relies on timely delivery.
While JIT increases efficiency, it is not a backup plan for unexpected disruptions.
In fact, JIT makes companies more vulnerable to supply chain interruptions.
B. Backup plans (Incorrect)
A backup plan generally refers to IT/data backup or system recovery strategies, not a comprehensive risk management approach for supply chain issues.
Contingency plans encompass broader business continuity strategies beyond simple backup plans.
D. Standing plans (Incorrect)
Standing plans are routine, long-term procedures for normal operations, such as HR policies or standard operating procedures.
They do not specifically address unexpected crises like supply chain failures due to war.
IIA Standard 2120 – Risk Management (Ensuring business continuity planning)
IIA Standard 2110 – Governance (Assessing organizational resilience strategies)
IIA Standard 2130 – Compliance (Evaluating regulatory and risk mitigation plans)
Step-by-Step Justification:IIA References for This Answer:Thus, the correct answer is C. Contingency plans, as they are specifically designed to address unexpected disruptions like supply chain failures due to military conflict.
