Procurement Policies and Risk Management

Almost all organizations and institutions nowadays have a viable procurement policy. 
They have their objectives of saving on expenses and at the same time building a good
relationship with their supplier.  But when it comes to risk management procurement
policies, very few have a good program.  That is why we really need to start focusing on
this area of risk management.  Recent financial disasters have prompted many companies
to apply a well organized risk management program.  However, risk management in
procurement policies has seldom been included in the plan.

Basically, procurement policies have the same statements wherever you go.  These
statements usually ensure that the company has acquired the best possible price; that they
have conducted their transaction in a fair, reasonable, and transparent manner; and that
their transactions have been in compliance with the law.  As much as possible, these
statements have been the bible of all procurement policies.  But the question right now is: 
What if one of these statements was not followed?

Risk management in procurement policies is relatively new in the organization.  Since
risk is a given, companies have been finding ways to minimize or eliminate them.  The
people who have been assigned to this project are expected to be accountable for the
proper and effective management of the risks that have been identified so that the
company’s goals remain in line.

Ideally, risk management in procurement policies require people to compare which risks
will have the biggest impact to the company with risks that have the greatest chances of
happening.  After a proper comparison of the identified risks, they have to prioritize each
one—and this is where managers often find it hard to balance (big loss but low chances
or big chances but low loss).  A good risk management procurement policy will have a
good balance of both.