High School

Panasonic announced plans to start developing cobalt-free automotive batteries. With certain raw materials being vulnerable to widespread disruption caused by demand spikes or production bottlenecks, other industries that depend on such resources may be forced to switch to other products.

This is an example of mitigating what type of risk?

A. Inventory
B. Supplier Financial Distress
C. Natural Disaster
D. Quality

Answer :

Panasonic is developing cobalt-free automotive batteries to mitigate supply chain risks and address potential disruptions caused by demand spikes or production bottlenecks.

The correct answer is a. Inventory risk. Inventory risk refers to the potential disruption or uncertainty in the availability of raw materials or components needed for production. In this case, Panasonic's move to develop cobalt-free automotive batteries is a proactive measure to mitigate the risk associated with the reliance on cobalt, a raw material vulnerable to supply chain disruptions. By reducing dependence on cobalt, Panasonic aims to address potential issues caused by demand spikes or production bottlenecks in the cobalt market.

While b. Supplier financial distress, c. Natural disaster, and d. Quality are also valid categories of risk, they are not directly applicable to the situation described. Supplier financial distress refers to risks associated with the financial stability of suppliers, while natural disasters pertain to unexpected events that can disrupt supply chains. Quality risk refers to potential issues related to the quality of products or components. In this case, the focus is on mitigating the risk related to raw material availability and seeking alternative resources.

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