How risks impact your procurement
Risks can affect the scope, timing, budget and quality of your procurement.
It’s important to monitor and identify risks that could affect or stop your procurement. You must constantly monitor known risks and scan for new risks.
When identifying risks you need to consider:
- how likely they are to occur
- the consequences for cost, schedules or user acceptability if it does happen
- the level of risk (a combination of likelihood and consequences)
- the priority rating of the risk
- the ability of both yourself and your organisation to deal with them
- your capacity to manage them
- the level of control you have to minimise or prevent them
- the impact on your procurement objectives and outcomes
You need to document any risks and create a plan for how you can manage them. Also bear in mind you may need some training or help from an expert.
What are the types of risks?
Examples of risks include:
- damaged or faulty goods
- shortage of raw materials
- supplier non-performance
- industrial action
- health or social risks for a user
- damage to reputation
- natural disaster
- acts of terrorism
You need to manage risks during and after the procurement process.
How to identify a risk
When identifying risks you need to consider what can go wrong and the what happens if it does. In some cases, identifying a risk may present unexpected positive outcomes.
To identify risks:
- talk to subject matter experts about what they see as possible risks
- learn from completed procurements that are similar to yours
- brainstorm scenarios that could result in a risk
Who is responsible for identifying risks
Anyone can identify a risk. If you identify a risk, you should immediately raise it with your team and manager.
It’s helpful to get training to learn how to identify risks. Speak to your procurement governance unit about how you can receive training.
Your organisation will have its own risk management plan. Speak to your procurement governance unit about the relevant plan.