Risk management isn’t a new term or notion to the supply chain and procurement industry, yet it continues to be one of the least addressed priorities within organizations. KPMG recently shared a report on fourth-party risk that notes roughly 80% of businesses say they need to urgently improve their assessment of fourth parties in their supply chain.
Third Party Risk Management
It’s time to rethink the role procurement professionals hold in organizations, and this shift is critical to reducing organizational risk and boosting resilience.
Risk plays a role in every decision that is made by every business – and the supply chain is certainly no exception. Every supplier choice, contract negotiation and procurement transaction involves an unavoidable element of risk.
But just because risk can never be fully eliminated, that doesn’t mean it’s ok to leave it up to chance. Effective supply chain risk management demands continuous attention, careful planning and thoughtful execution.
The worldwide crisis made us hyper-aware that trust-worthy relationships are vital. Effective third-party risk management is the best way to gain assurance that responses and decisions are risk-informed. Managing third-party relationships, calibrated for criticality and risks, has never been more critical. This is the most reliable path to strengthen business resilience, protect stakeholders and the bottom line.
A new survey by Gartner shows only 12% of organizations felt prepared for the impact of the coronavirus outbreak in March. And while 26% of those surveyed believe the coronavirus will have little or no impact on their business, just 2% of companies believe they can continue business as usual.
An unlikely health and safety pandemic has thrown the world into a tailspin. Regulatory changes related to COVID-19 are already touching all facets of the industry. They are likely to continue to evolve at a brisk pace, making it difficult for some employers to keep up. Although it would have been impossible for any company to be fully prepared for such low probability, the companies that put health and safety at the forefront of their efforts have found themselves in a much better position to respond.