According to Deloitte’s most recent CPO study, 41% of CPOs are heavily involved in risk management activities. But what are these activities and how do they differ across industries? The findings might surprise you.
For manufacturing, commodity price volatility was the top supply risk (with 61% of respondents reporting it as such). In financial services – no surprise here – 70% of respondents reported that the top two supply risks were regulatory and reputational related.
In the public sector, economic risk was the most-cited supply risk factor. For technology, media, and telecommunications companies, 59% of respondents reported that service delivery was their biggest risk.
For healthcare & life sciences and energy/resources, reputational risk came in at 50% and 57% respectively, the highest reported risk factors for both. Consumer businesses collectively reported that reputational and commodity price volatility risks were the highest areas of concern and focus.
Risk management is still an immature procurement function in many cases, and teams, in Deloitte’s words, are “still coming to terms with this increased accountability … [and] if Procurement is to meet the expectations of the business then CPOs will require more sophisticated tools and approaches to evaluate and monitor future supply market risk … [Further], if Procurement is to bridge this capability gap then solutions and techniques such as real time reporting of supply chain risk through interactive dashboards, and scenario planning through the use of predictive analytics, are very likely to increase in prevalence in the near future.”
But basic skills and talent will be needed to man the analytical guns! And that will take us to our next post on this topic. The full report can be downloaded via this link (including the cool embedded videos).