A new series on Risk Management for procurement professionals

For this year’s Spend Matters Fall 2024 SolutionMap release – our comprehensive methodology designed to help organizations evaluate and select procurement solutions – we launched a new module: third-party (and supply chain) risk management (TPRM and SCRM). This module is a data-backed granular view of risk management solution providers and their capabilities (including suites, supplier-management–centric, and TPRM and SCRM specialists).

In concert with that launch we are delighted to publish the first in our series of risk-management–themed content for Q4 2024. During the next few months we will be publishing a host of risk-related materials aimed at helping practitioners, vendors and investors learn more about the risk technology landscape from our solution-specialist analysts.

Our In-Depth Guide to Risk Management Solutions outlines the main market players, how these solutions fit into the S2P process, their common features and top capabilities, why and when to recognize the need for them and how to select the right solution for your organization.

The importance of risk management solutions in today’s volatile business environment cannot be overstated – according to our lead analyst for risk, Bertrand Maltaverne:

“Because of the multiple disruptions and events of the past few years, many companies have recognized just how fragile they are owing to their historic supply chain and sourcing decisions. While VUCA (Volatility, Uncertainty, Complexity and Ambiguity) became ‘permacrisis’ (illustrating an environment of prolonged instability and constant upheaval), the evolution of the regulatory/compliance landscape created the condition for a ‘perfect storm.’ These elements led to a growing imperative to ramp-up procurement capabilities related to risk management. Simple financial checks at the time of validation of a supplier/third-party don’t cut it anymore.

“While these circumstances have brought a tremendous opportunity for the procurement function to position itself as not just a ‘cost-cutter’ but a potential source of competitive advantage, they also brought a number of challenges.”

As such, our risk management series for the next few months will cover:

• Definitions of risk – the two key frameworks that address the challenge of managing risk, Enterprise Risk Management and Governance, Risk and Compliance, broken down into how they fit together, their component parts and how they interact with procurement in terms of third-party and supply chain risk.
• We will then look at the different types and sources of risk, and the traditional framework used to analyze the external factors that can impact a business and classify such risks, PESTLE. We also give an even more exhaustive and detailed view of the different risk sources to consider and have a succinct guide to each risk type, including their source, what it means for business and how to mitigate it, in the ‘Six Flavors of Risk’:
  • Cyber
  • Financial
  • Geo-political
  • Man-Made
  • Natural Disasters
  • Reputational

Because risk is a cross-functional consideration for all businesses, we provide opinion on who owns, or should own, risk in an organization.

• While the breadth and depth of risk types and sources, and the solutions that aim to manage them, can be overwhelming, we aim to outline the value (ROI) you can expect from implementing risk management, including both the tangible and intangible returns from digital technology.
• Then, of course, you need to understand the capabilities of the risk management solutions, since the market is as complex as it is broad. So we describe the benefits and challenges of the various risk scenarios and their solutions.
• As well as their capabilities, we must also consider the dynamics of the risk solution landscape. Understanding the types of supplier, their categories and how they collaborate and compete, the regulatory landscape; the supply market and considerations around ESG and human rights all come into play here.
• We round off this list with key takeaways from our SolutionMap findings for Fall 2024.

Throughout the quarter will also feature specialist interviews with solution providers about the challenges they are hearing from their customers and how best they can be met. Read this unbiased insight from the chief product officer at Aravo.

And hear from other solution provides on customer wants and needs, such as Brooklyn Solutions here, Certa here and State of Flux here.

We will also be talking to practitioners to get their take on the importance of risk management within their organization, how they approach it and, hopefully, some real-life risk stories, such as this interview with a procurement leader in the financial services industry, a procurement leader at FMCG giant Unilever and this interveiw with ex-President CIPS, ex-CPO and now procurement business writer.

And as no risk series of commentary, opinion and analysis is complete without head-to-head discussion, we will also be hosting and contributing to webinars with industry experts on the topics of sustainability, human rights, diversity and the other considerations that form the wider risk management picture – such as this one with the SPP.

Of course your opinion is valuable too, and sought after, so keep an eye out for our LinkedIn polls asking for your input on questions about the level at which risk is placed on the senior management agenda.

As always – if you have any questions or would like to contribute to our series, please reach out.