‘Risk’ is the term defined as an unpredictable set of events or individual event that impact on the achievement of project’s aim. This uncertainty factor linked with Risk is considered to be a threat, however, it can also be considered as a possible opportunity for the project managers to analyze the process before starting the project. Risk management is often referred to the systematic application of approach, processes and principles for assessing and identifying risk and planning and implementing the suitable response. The concept of risk is often lined with focus and adversity on the threat, rather than opportunities. The identification of project risk is the most vital process in Risk management planning. As the risk identification locates what type of risk might impact on the project and works on its characteristics. Procurement is the management and acquisition of external resources; it works as the function of operational and strategic significance to any firm in modern society. It is similar to the case where it is often managed through the involvement of procurement professionals by central procurement organization or distributed administratively on any other model. The major part of procurement is to make sure an organization has expected the supply of the external inputs it needs, delivering cost-effective manner and offering demonstrable value of money for supporting the attainment of objectives of the organization. In the procurement context, major factors that lead to greater focus on risk management is actually the blurring of managerial boundaries through:
- Increasing contingent workers use including contractor instead of employees
- The formation of collective relationship between customers and suppliers as essential members in entire supply chain
In order to add high importance to the risk management plan, it is essential to be delivered from clear procurement strategy of articulation and how the plan will support the future outcome of the organization. Under specific procurement activities, the systematic approach where the risks are managed, identified and assessed at the suitable level will carry major advantages to the organization. Thus, this provides an opportunity to the procurement professional to get more engaged in complex procurement decision and major projects. The approach is restricted from the maturity of risk management at the level of organization, thus providing a chance to procurement profession to undertake the chief role as a contributing factor for effective risk management throughout the enterprise.
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