Series 79 practice questionmediumOperational due diligence – supply chain risk
An investment bank discovers that a target company sources 85% of its inventory from a single overseas supplier. This situation MOST likely creates which of the following concerns?
- ATransfer pricing risk
- BBusiness continuity risk✓ Correct answer
- CTax compliance risk
- DAnti-money laundering risk
Explanation
Why B — Business continuity risk
Reliance on a single supplier creates significant business continuity risk if disruptions occur. Transfer pricing and tax compliance relate to intercompany issues, and anti-money laundering is not directly relevant.
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