Risk management is a vital component of supplier management and is in the spotlight today amid the evident failure of certain large corporations to build adequate resilience in their operating models. Organizations realize that they can no longer rely on an established operating model and have started looking at risk management strategically to gain a competitive edge and stay relevant in a fast-evolving landscape.
Third-party Risk Management (TPRM) is the procurement function’s responsibility in most organizations. While this function is part of a wider risk strategy under a risk-focused group, procurement typically manages the TPRM program, including outsourcing-related risks. Deriving strategic value from risk management requires buyers to adopt a risk-conscious approach to manage their outsourcing portfolios. As buyers chart their approaches to achieve the target risk management maturity, they need to factor in multiple considerations to decide the best-fit risk management program for managing outsourcing-related risks, including treating risk management as a strategic differentiator, shifting the ownership to strategy leaders, increasing technology leverage, and focusing on risk management transformation.
In this viewpoint, we study the outsourced risk management landscape, with a focus on supply base / location risks and service provider risks. We outline the factors necessary to build a best-in-class risk management organization by outlining the key challenges with current risk management practices and ways to develop comprehensive risk management capabilities.
Scope
Risk management processes across supply base / location risks and supplier risks
All geographies and industries
Contents
In this viewpoint, we study the following topics:
Current risk management practices
Key challenges with current risk management practices
Emerging best practices in the risk management domain
