Risk Management in Business

This assignment delves into the critical role of risk management in achieving business growth and success. It emphasizes how effective risk management strategies can mitigate potential disruptions to the supply chain process. The report highlights the significance of planning and implementing proactive measures to address various risks, ensuring smooth operations and organizational development.

Project Risk and Procurement
Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................6

INTRODUCTION
Procurement and risk management are those vital processes which are prone to high risk.
The risk factors are related with identifying essential needs of planning and procurement,
preparing selected documents and also, doing negotiation in between contracts. Main and
important function of procurement management is linked with providing solutions to all types of
problems and managing all risk factors in an effective and planned way (Burke, 2013). The most
important way to deal with risk factor is developing strategies and executing working according
to them and development of procurement processes. Agora Greek Delicacies UK Ltd are
supplying food products from Grece. Risk factor can also be reduced by developing guidelines
and plans so that risk factor can be easily resolved. The undermentioned report is based on how
functions related with procurement can solve the risk factors which are arising globally.
TASK
Concept of risk
Risk is the main factor by which Agora Greek Delicacies UK Ltd is facing threats from
business activities. Thus, firms have to face huge losses in their business activities and they are
not able to achieve growth and profitability from their business operations. Loss can be in
different forms like financial risk, marketing and trade risk when uncertain situations arise in
economy. There is always chances that risk may arise in economy and thus, effective measures
have to be adopted in advance in order to fight with those risk factors (Kendrick, 2015). Plans
and policies which are linked with contingency can be adopted in order to minimise the risk
factors that may arise in future times.
Procurement and supply management
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The most vital and important factor which is linked with supply chain management is to
ensure that goods and other materials flows in proper direction in order to gain success in all
business operations. In the present world, all businesses are running their operations in
increasing complex and uncertain environments which contains high risk of supplying all
elements in proper flow in order to achieve success in their overall business operations. Due to
high environmental pressure and risk factors of firms are designing plans and policies in order to
minimise all factors which are related with risk. If there is any disturbances in supply chain then
it will directly affect flow of goods and services. This can create negative impact on the overall
management of operations thus disturbing their overall work flows. There can be
mismanagement in manufacturing process and thus, it can affect the overall productivity and
capacity of utilization of goods and services. In long term disruption in supply chain,
management can greatly affect financial conditions of business and prices concerned with
shareholders at business places.
If firms are dealing in purchasing of goods and if there is disturbances in supply chain
management process, then it will directly affect demand factors in economy and dissatisfaction
of customers thus there sales ratios will greatly decline. The disturbances in supply chain can
arise from different sources which include natural disaster, strikes, production facilities and
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Illustration 1: Supply chain management
(Source: Supply chain management, 2017)

problems which are related with inventory management systems (Wysocki, 2011). If the concept
of supply risk can be understood in an effective way then it is very useful for purchasing firms
who are dealing in food products they can easily fight with all the risk factors that are arising in
organisations.
Procurement functions are linked with cultures that are operating in business organisations.
There should be effective management process in order to ensure smooth working of all
activities so that supply chain will not be affected by any types of risk factor. Procurement
functions should management all the factors globally so that vendors does not face any type of
difficulty in their operation process (Larson and Gray, 2013). If there will be disturbances in
supply chain process then business will not attain growth in their operations as there will be no
coordination among any departments. They should design a structure according to which all
activities have to be executed in effective and planned ways. The design which firms are
choosing should be beneficial in order to perform all business activities in effective ways which
helps in creating value for firms and there should be coordination among activities of all
department thus firms will achieve growth and profitability from their business.
There are mainly four different types of procurement functions which are evaluated as:
Strategic function: This function is at the top level in hierarchy. Firms are making plans
and policies by which working have to be executed in effective and planned ways in order to
achieve effective results. It is very useful process in order to execute working in planned ways so
there will be no disturbances in supply management process and all process are execute while
making coordination among all departments (Meredith and Mantel Jr, 2011).
Supportive function: This is a vital function for every business in order to maintain
strong coordination among all departments and support those departments which are lacking to
work in effective and planned ways. They are designing common types of coding systems which
are similar to those of strategic functions in order to find out the final cost which are executed on
purchase of commodities. Procurement functions are always based on commodities and then they
are forwarded on the basis of buyers choices of implemented lower cost products. These process
are helpful for buyers so that they will not face any type of difficulty in purchasing of goods thus
supply chains are effective at work places (Osipova and Eriksson, 2011). These functions are
contributing in indirect ways in overall business operations thus there is planned expenditure
which have to be invested in purchasing of commodities.
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Business environment can be affected by Procurement in following ways which are
described as:
The financial environment consist of economic performances at business places and it
mainly affects the process used by buyers while they are performing their operations linked with
procurement. The main risk factor is fluctuations in currency of economy so it will affect their
revenues and profitability factors. The purchasing firms can be greatly affected by inflation
factors which arise in economy because if there is increase in prices then they have to sold the
products according to high prices and customers may not be willing to buy products at these
prices.
If there is changes in plans and policies that are formulated by government then it may
affect buyer’s positions with whom they are executing their business activities. If changes are
made at domestic level then it will affect supply chain management process as there operations
are carried out in effective ways (Phillips, 2013). There can be various opportunities gathered in
open and free trading market from where buyer can purchase goods. Procurement department
have to consider all types of political changes in order to minimise future risk and operations will
be carried out in effective and planned ways.
Technological changes - In the present era, there are different types of changes in
technologies and all operations are executed with the help of new innovations in technology so
that supply chain process can also be made according to faster and effective technologies. Firms
have to focus on all technological changes as it can affect their growth and profitability factor of
overall business operations (Steyn and et. al., 2011). The stage from where services have been
offered and the different ways by which buyers are collaborating with all suppliers in economy
the technological factors have greater impact on procurement process.
Environmental fluctuations: It is one of the most important challenges which are linked
with supply chains. When the conditions of economy are affected by natural disasters, scarcity or
depletion of natural resources then all the departments related with procurement functions are at
the grace of environment. The changes in political and weather conditions are greatly affecting
supply chain management process. These departments can make plans so that all the
environmental factors like scarcity of resources can be easily handled and supplies can make
strategies in order to minimise the risk factors. There is also an effective advice given to them in
order to avoid high level of risk from economy.
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Structured approaches are based on stages which are designed in relation to development of
various programmes so that risk factor can be easily minimised in economy. They are making
plans so that problems can be defined and understood easily in order to fight with all types of
risk. Planning is based on evolution of factors which may decrease risk factors then
implementing of plans and doing evolution and market testing in order to follow proper
structured approaches at work place.
Case Study
Zions Bancorporation have faced huge complexity in their business operations thus it was
evolved as the greatest risk factor for them. Management have to frame designing of various risk
managing programmes that have to be completed in desired time frames and proactive actions
should be taken towards managing all types of risk factors in economy. Thus this company have
focused on developing plans in order to solve all types of risk which are faced by them in
economical ways.
Literature Review
From the view point of Pryke and Smyth, (2012) Risk and procurement management are
always walking side by side. It is advised for all business to analyse risk factors in order to
operate supply management process in effective ways so that working will not be affected. All
the risk factors should be analysed so that they will not affect operations of any internal parts and
various plans and strategies should be formulated in order to minimise risk factors which can
occur in future state. All risk factors should be kept in documentation in order to carry out
working in an effective and planned way.
According to Schwalbe, (2015) all types of theories, concepts and models are most
important parts for project management team. All the theories are formed by doing effective
monitoring and observation of all types of calculations. The experience of mangers are most
important as they know how to solve the problems in effective ways in order to achieve good
results. All the theories are framed by higher authorities at work place so that potential risk
which may arise in future times can be effectively resolved.
CONCLUSION
From the above report, it can be concluded that in business, risk management is highly
important so that supply process will not be affected and firm will achieve growth and success. It
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has also been assessed that business can formulate plans and strategies in order to fight with all
types of risks so that operations will be carried out in an effective way and business will achieve
growth and success in their operations.
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REFERENCES
Books and Journals
Burke, R., 2013. Project management: planning and control techniques. New Jersey, USA.
Kendrick, T., 2015. Identifying and managing project risk: essential tools for failure-proofing
your project. AMACOM Div American Mgmt Assn.
Larson, E. W. and Gray, C., 2013. Project Management: The Managerial Process with MS
Project. McGraw-Hill.
Meredith, J. R. and Mantel Jr, S. J., 2011. Project management: a managerial approach. John
Wiley & Sons.
Osipova, E. and Eriksson, P.E., 2011. How procurement options influence risk management in
construction projects. Construction Management and Economics. 29(11). pp.1149-
1158.
Phillips, J., 2013. PMP, Project Management Professional (Certification Study Guides).
McGraw-Hill Osborne Media.
Pryke, S. and Smyth, H., 2012. The management of complex projects: A relationship approach.
John Wiley & Sons.
Schwalbe, K., 2015. Information technology project management. Cengage Learning.
Steyn, H. and et.al., 2016. Project management: A multi-disciplinary approach. FPM Publishing.
Wysocki, R. K., 2011. Effective project management: traditional, agile, extreme. John Wiley &
Sons.
Online
What is Supply Chain Management?. 2017 [online]. Available through:
<http://searcherp.techtarget.com/definition/supply-chain-management-SCM>.
[Accessed on 9th October, 2017].
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