In Part 1 of this series we looked at how procurement can expand our impact on risk by getting involved earlier in the process and by staying involved longer. In Part 2 we’re going to compare and contrast internal and external sources of risk and how to keep them in check.
It is critical that procurement not think of risk mitigation activities as separate from our other spend management responsibilities. Sourcing, spend analysis, supplier management and contract management should all reflect a keen awareness of risk, especially once procurement has demonstrated the ability to carry these processes out to good effect under internally driven objectives.
Each category of spend should be evaluated for the risk profile it bears both inside and outside of the company. When procurement recognizes that the enterprise is part of a much larger system of players and forces, and accepts the role we can play in managing those dynamics, our work becomes far more complex. Fortunately, this complexity comes with a corresponding increase in potential for value creation and competitive advantage.