The disruption caused by the global pandemic has brought the issues of risk management to the forefront. To the point where many companies irrespective of size, view it as a mission critical activity .
A complex topic but given the current economic landscape companies should not shy away from addressing these issues and should manage risk now. Chartered Institute of Procurement and Supply Chain suggests that risk can be defined as ‘the probability of an unwanted outcome happening’.
Risk management involves three key activities: risk analysis, risk assessment and risk mitigation all of which facilitate the taking of decisions and actions to control risk appropriately by providing a disciplined and objective approach.
Risk, Compliance, and IT leaders struggle to manage and to oversee today’s complex regulatory environment. Successfully managing third-party risk in this environment gets more problematic each year as business relationships and regulations grow ever-more complex. The consequences of failure are high, with headlines showing large fines from regulators and negative publicity that destroys brand value.
Many businesses, struggling to cope with this uncertainty and the high stakes involved, hire more employees in their back office and compliance departments as a solution. The effectiveness of new hires is tampered by old manual processes and outdated systems. Resulting in increased costs and continued compliance gaps.
In their Effective third-party risk management and governance survey, Deloitte has uncovered some key finding which are worthy of mention: 52% of the respondent organisations are accelerating the evolution of effective enterprise risk management (EERM) into a broader concept which includes contract management, performance management and financial management.
In the same survey, Deloitte has discovered that many organisations are developing longer-term visions of EERM transformation for the coming two or three years. Respondents aspire to a ‘single source of truth’ as a key component of their transformation vision for effective enterprise risk management concept.
By utilising a third party in your risk management efforts, companies can benefit from a continuous risk monitoring programme, get compliant faster and operationalize their risk culture by channeling spend to the right suppliers and responding to risk.
In the second part of our risk management blog, we are going to talk about what a risk management solution looks like and what are the benefits of using such a solution. For more information on this subject, don’t hesitate to get in touch with our procurement experts!