RISK MANAGEMENT be proactive and evaluate the problems that might occur when acquiring goods or services , or working alongside external suppliers , to build effective strategies to minimise their impact .
“ Once any potential risks have been identified , they must be evaluated to assess their likelihood and strategies should be developed to address them or minimise their impact should they occur ”.
Understanding the risks in procurement Some label the 2020s as a ‘ VUCA World ’ – one that is much more volatile , uncertain , complex and ambiguous . Procurement teams are broadening their set of risks and risk domains . The Hackett Group encourages teams to consider the eight risk domains :
1 . Supply chain 2 . Information security 3 . Physical and environment
( including geopolitical ) 4 . ESG and sustainability 5 . Financial 6 . Regulatory 7 . Quality 8 . Reputation
Vicky Kavan , Director , Procurement and Purchase-to-Pay Advisory at The Hackett Group , gives an example of this from both a manufacturing and services company perspective : “ if you are a manufacturer , the most critical risk domains include supply chain risk , financial and information security . This means topics like scarcity and shortages of supply , logistics and
procurementmag . com 69