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How to mitigate procurement and supply risks

Procurement and supply won’t experience the same risks, but it’s important to identify ways to mitigate them 

How do you mitigate risks in procurement?

Risk mitigation in procurement and supply will vary in every organisation, as some organisations may not experience the same risks as others. It’s important that risk mitigation is part of your overall strategy, as without it, it can affect the whole supply chain. Take a look at some common risks within procurement and supply and how to mitigate.

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What are the four types of risk mitigation?

It’s important to choose a risk mitigation strategy that works for your organisation. There are four types of risk mitigation which include:

  • Treat: This involves acting on high risk activities and looking to resolve likelihood or the limit the consequences.
  • Tolerate: Tolerating a risk, means you’re accepting that there is little that can be done to change the risk. This often happens if the likelihood and impact of the risk is low.
  • Terminate: If the risk is too high and will have a severe impact on your organisation, it’s best to terminate the contract or withdraw a product or service from the market.
  • Transfer: You can transfer your risk activities to a third party; however, you’ll still be liable if things go wrong. Consider the use of insurances to mitigate the risk exposure certain activities bring.
 

Risk management key themes

Risk management Commodity Risk Management SCOR Model Supply chain
Supply chain strategy Ethical risk Vendor risk Vendor risk assessment
Procurement fraud Deloitte/CIPS Resilience report Risk assessment

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