Project Risk and Procurement Management16 Project Risk and Procurement Management Project Risk and Procurement Management

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PROJECT RISK AND PROCUREMENT MANAGEMENT
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Abstract
For an organization to align its objectives with its strategic plans, it has to engage in
different projects. Evidently, they play competent roles in the success of a company and thus
they should not only be prioritized, but also they should be carried out with a lot of care.
Although different organizations have been directing much of their attention to completing
certain projects, evidence shows that they are at some point exposed to an increased level of
uncertainty. It impacts the project performance while also influencing the overall plan of the
organization. Risk, which is the uncertainty, can be defined as the possibility of the occurrence of
accidents or events that alter entire the goals of an organization. According to the Enterprise Risk
management Initiative Staff (2004), the management of risk is not a linear process, but efficient
risk management practices can comprehend the many factors that connect each other in sets. The
aspect of globalization has expanded the global market, hence increasing the competitive
advantage of states. Besides, differences in religion, culture and even values mirror the global
sourcing. The varied decisions that companies make hold unforeseen consequences, which
expose their projects to unexpected risks. Following the need to address huge losses that relate to
finances, time and people, it is imperative to examine the concept of risk management. All
projects should be evaluated for risks since failure to identify and eliminate them could lead to
major losses both in the short-term and long-term. It is thus a mandatory for organizations to
follow the entire risk management process, which includes risk identification, risk analysis, risk
response, and risk monitoring and control to mitigate and even eliminate risks. In such case,
projects and companies will be guaranteed success.

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Project Risk and Procurement Management
Introduction
Different authors propose various ideas on their understanding on the general concept of risk and
its management process. Creemers et al. (2014) define risk as a threat of damage or probability
of injury, loss, liability, or any negative occurrence that results from an internal vulnerability or
external occurrence and that can be prevented through preventive action. According to the study,
effective risk management is essential to enable an individual identify the opportunities, threats,
weaknesses, and strength of a project. In other words, planning for unexpected events puts an
individual or organization in a position to immediately respond to any rise of the risk in the
process of the project. In a systematic review, Hazır (2015) denotes that it is essential to define
how one can handle the potential risks to enable the mitigation, identification, and avoidance of
the impacts that come with the risks. The same study denotes that successful managers in the line
of a project are aware that risk management is essential as achieving project goals is based on
preparation, planning, evaluation, and results that finally contributes to achieving the strategic
goals.
Background of the case study organization
Compass Group Limited is one of the world leading companies in Australia in the hospitality
industry operating in around 50 countries. The company offers catering services to consumer
retail outlets as well as their vending solutions. In Australia, the company operates across a
number of sectors including defense, education, facilities management, healthcare and Age care
as well as other industries in providing food and support services (Kramar, 2014). Due to its

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large-scale operations, the company has managed to employ over 500000 people and has been
reported to serve at least 4 billion people in a year.
The company needs to adopt a risk evaluation process by using best time practices on various
projects while assessing the impacts of every activity required for the mitigation of exposure to
problems. The evaluation process will as well help in exploitation of opportunities that can
capitalize on the strengths of the company. For instance, the project will push the development
and delivery of a training program with the aim of creating awareness on internet security such
as identity theft, viruses, phishing, and help desk calls received from clients concerning the
mentioned risks. In case the go down, it can reasonably be assumed that the risks management
initiatives adopted have led to the success of the project.
Theoretical Analysis of risk management
Plans adopted for risk management helps in contributing to project success as it helps in the
establishment of the both internal and external risks that are likely to be experienced in the
project. The plan will typically include the probability of the risk occurrence, proposed actions,
potential impacts, as well as the probability of occurrence. According to Green (2015), low risks
events often have little or no impact on the schedule, performance, and cost of a project.
Moderate risks leads to an increase in the disruption of project schedule, degrades performance,
and increases costs. High risk events lead to a significant increase in the disruption and budget as
well as leads to performance challenges. Defining risk management processes adopted in the
company will help in the minimization or elimination of negative risks to allow for a timely
completion of a project. It is hence necessary in allowing the company to minimize expenses on