Risk Management for Procurement and Financial Risks

This article discusses risk management techniques for complex procurements and financial risks. It covers the identification and handling of risks, as well as specific financial risks in healthcare and construction. Mitigation actions and strategies are also provided.

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Title: Risk Management
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Contents

Risk Management 1
General Procurement and Financial Risks.......................................................................................3
Specific Financial Risks.............................................................................................................................3
Risk Mitigation Actions...................................................................................................................4
References........................................................................................................................................5

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General Procurement and Financial Risks
Risk management is crucial part of good management and achievement of effective
procurement of complex and large scale project activities involving sensitivity analysis.
The techniques and approaches are for complex procurements. The framework can be
utilized for assessing financial risks and routine purchasing procurements (Dionne, 2013).
1. Systematic identification of development of plans and assessment of risks and handling
them.
2. Appropriate provision for accountability to the project managers and management of
each financial risk.
3. Adopting the risk management technique which commensurate with the significant of
risks involved (Kousky & Kunreuther, 2018).
Specific Financial Risks
1. Hospital Mergers and acquisitions have been on the rise and transactions bring
different set of risks.
2. Health care consolidation has been taking place in all the new models. The
noteworthy capital outlays are applicable; there can be latent losses, until it is
managed carefully. The complex nature of new technology in hospitals needs to be
understood with political, financial and economic aspects (Hofmann & Scordis,
2018). Assessment of a contingency allowance must be taken as a priority task by the
managers.
3. Reconstruction of the most expensive building in Australia which is approximately
2.4 billion dollars requires investment portfolio management. There is a need to
determine how the fixed income versus with long equity alternative scheme.

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4. Healthcare entities need to consider monetizing activities like selling underutilized
property. The key to success for investment in healthcare unit is having an
understanding of new and practical issues which occur in daily lives.
Mitigation Actions
The main purpose of risk analysis and identification is to prepare the board for risk
mitigation. This can reduce the possibility of a risk event can occur. Risk management is an
ongoing effort and includes how majority of risks can be mitigated. Risk mitigation plans and
specific strategies must be identified (Acharyya & Brady, 2014).
The identification of root causes of majority of risks and quantification in different
phases. The risk management process must evaluate common causes and risk interactions.
Identification of mitigation strategies, tools and methodologies for different major risks is
required. Assessment and prioritization of risk mitigation alternatives and selection of resources
which are required for particular risk mitigation alternatives. The results must be communicated
to all the project managers for the purpose of implementation. Risk mitigation plans must be
developed in detail and executed through contractors and consistent risk mitigation process
should be adopted. Negotiation of the contract conditions and development of contingency plans
is necessary.
References
Acharyya, M., & Brady, C. (2014). Designing an Enterprise Risk Management Curriculum for
Business Studies: Insights From a Pilot Program. Risk Management And Insurance
Review, 17(1), 113-136.

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Dionne, G. (2013). Risk Management: History, Definition, and Critique. Risk Management And
Insurance Review, 16(2), 147-166.
Hofmann, A., & Scordis, N. (2018). Challenges in Applying Risk Management Concepts in
Practice: A Perspective. Risk Management And Insurance Review, 21(2), 309-333.
Kousky, C., & Kunreuther, H. (2018). Risk Management Roles of the Public and Private
Sector. Risk Management And Insurance Review, 21(1), 181-204.