This facet of Procurisk® is designed to expose financial risks occasioned by procurement and supply chain actions.
A failure to adequately cover off these risks has jeopardised the commercial future of some organisations. In others, there has been severe reputational damage when budgets have been exceeded and project costs have escalated to embarrassing levels.
It is essential that the financial risks, incurred through contracting with third parties, are visible and a strategy is put in place to mitigate the risks. These risks emanate from many sources, including suppliers going into administration, unsecured advance payments being made and the absence of performance bonds on high-risk projects.
The failure to control long-term purchase prices is a classical financial risk, often evidenced by a lack of price forecasting. The Financial Risks data set is designed to provide a structured analysis of the approach and success of managing financial risks.
The business benefits from using this data set include margin protection, effective financial planning, enhanced credibility with investors and the reputational enhancement accruing from consistent organisational financial performance.