University Project Risk and Procurement Management: Detailed Analysis

This report provides a comprehensive overview of project risk and procurement management, emphasizing the critical role of strategic procurement and supplier relationship management (SRM) in mitigating risks. It explores various risk types, including price, quality, delivery, legal, and reputational risks, and details the importance of risk identification, analysis, response, and monitoring. The report highlights the significance of SRM in fostering strong supplier relationships and outlines the steps involved in strategic procurement planning. Using the example of Agora, the report illustrates how organizations can proactively manage risks to ensure sustained growth and operational efficiency. The report also underscores the need for continuous education and training in procurement practices and the potential consequences of even minor errors in risk management. It concludes by emphasizing the prioritization of risk management as a crucial step in enhancing organizational performance.

Running head: PROJECT RISK AND PROCUREMENT MANAGEMENT
Project Risk and Procurement Management
Name of the Student
Name of the University
Author Note

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Abstract
Due to the advancement in marketing and globalization, choosing right supplier for the
organization has become very crucial and risks are being identified at every stages of the
project. Strategic procurement can be better option in manner to mitigate both these issues
through depending on the Supplier Relationship Management (SRM). In SRM the
professionals related to the procurement management are the one whose responsibility is to
develop robust relationship between the suppliers and make negotiations between them with
favourable conditions and terms. This report focuses on how the various risks could affect the
expected growth and sustainability of the organization. This report states the risk as the part
of the project and should be provided priority during te execution of the project. This report
presents a thorough research on the objectives related to the risk management. It can be
helpful in understanding the steps that could be helpful in mitigating the threats and risks to
the extent level. Several examples have been provided in manner to relate the theory with the
real world and present a proof about the originality. These are helpful in understanding the
importance of the risk assessment or mitigation processes within a project and how it could
play its vital role in manner to enhance the performance of the organization. Prioritizing the
risk could be recommended as the most crucial and prioritize step in the risk mitigation
process. This report also presents how small error could lead to the fall of the organization.
This report presents a thorough research on the articles presented by different authors on the
related topic.

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Table of Contents
Introduction....................................................................................................................5
Risk................................................................................................................................5
Supplier Relationship Management...............................................................................5
Strategic Procurement....................................................................................................6
Supply Chain Risk..........................................................................................................7
Price risk.....................................................................................................................7
Quality Risk...............................................................................................................8
Delivery risk...............................................................................................................8
Legal risk....................................................................................................................8
Reputational risk........................................................................................................9
Risk Management...........................................................................................................9
Risk Identification:.....................................................................................................9
Risk Analysis:..........................................................................................................10
Risk Response..........................................................................................................10
Risk Monitoring and Control...................................................................................11
Complex Models of Project Risk and Procurement Management...............................11
Theory concept and models.........................................................................................12
Importance of risk management...................................................................................13
Conclusion....................................................................................................................14
References....................................................................................................................15

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Introduction
Project risk can be stated as the part of the organization or the project and should be
given priority in manner to maintain the efficiency of the growth rate of the organization.
Procurement management is a process that emphasis on dealing with the concepts related to
the “Supply relationship Management” in which professional of procurement management
provides their concern about developing a robust negotiating and supplier relationships
favourable conditions and terms. As the technology is getting advanced and globalization is
becoming wider, choosing the right supplier in the future will be very critical due to the
complexity of the models related to the SRM. The aim of this report is to present a thorough
research on the project risk and procurement management process in manner to mitigate the
issues related to the resistance in the performance of the organization. This report could be
helpful in understanding the facts related to the risks ion a project and how important is it to
be solved at very early stages.
Agora
Agora is the first e-shop in the UK that is providing services related to the Greek
drinks and foods through reaching every customer. It is a B2B and B2C supplier and do
wholesale marketing in UK. They have developed a network of suppliers and producers
within both UK and Greek markets and are capable of fulfilling the needs of the customers
and raise a competitive market in the sector related to the foods and drinks. It is capable of
providing products at the competitive price and targets the market including retailers, hotels,
shops, restaurants and many more.
Risk
Risk can be defined as the part of the project that could be existed in many different
ways considering, whether the risk is small or big and which is capable of impacting the

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project and its activity in short, long, and medium term. According to Saldgrove (2016) risk
can be defined as “an uncertain event or condition that, if it occurs, has an effect on project
objectives which could be a negative or positive impact.” Internal or external factor in any
project or organization that could affect the proper functioning and data or information
related to the organization.
Supplier Relationship Management
Supplier Relationship Management (SRM) can be represented as the needful process for
the organization to determine the categories of the supply or supplier who are responsible for
managing the effective communication between the suppliers and the organization. It includes the
software and the business practices those are the part of the information flow of SCM (Supply
Chain Management). SRM is capable of increasing the efficiency of the output or production of
the organization those are associated with the managing inventory, acquiring goods and services
including the processing materials (Brindley, 2017). There are three important steps of the SRM
that can be stated as firstly, Supplier segmentation that focuses on mapping the suppliers against
the risk exposure and profitability. Secondly, it can be stated as supplier strategy development,
which includes the distribution of internal resources and planning in manner to meet the goals and
needs of the business. Thirdly, it is supplier strategy execution. A genuine SRM process should
focus on encompassing stationary companies and should provide the priority as strategic partners.
On the other hand, it is necessary to be notified that the strategic partner cannot be given same
priority or value as the transactional vendor (Glendon, Clarke & McKenna, 2016). It is necessary
that both the parties should exercise trust in each other and seek towards crossing the boundaries
limited to the goals of the organization in manner to set the supplier strategy for the strategic
partners.
It can be stated that the way of the execution of the strategic supplier relationships
should have only one target in manner to find innovative opportunities for the products and

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services, either in the process improvement or within the product development. This will help
the organization that is moving away from the relentless and cheap budget and it has been
becoming an obsession for the procurement community.
Strategic Procurement
It can be defined as the plan that has been crafted for the organization in manner to
concentrate on the aim of achieving the goals that may lead to the enhancement of the
performance of the organization. This could be considered as a long-term process considering
the future of the organization that could take four to five years. It does not include short-term
solutions for the problems that the organization is facing; rather it should focus on the
strategies those will be taken in account for the long term. This is generally developed by the
top level of the management or the team who is dealing with the procurement management
within the organization in manner to impose the rules and innovative thoughts (Hopkin,
2017). It is capable of influencing the way of the development and implementation of the
tactical procurement plans. (West et al., 2016) stated that “A strategic procurement plan is a
comprehensive plan that takes into account the stated goals and needs of the procurement
department and of the company as a whole and then works in a targeted manner to achieve
them, over time.”
It is very crucial for the individual to consider the long-term goals those have been set
for the company as a whole in manner to successfully implement strategic procurement plans.
Upgrading the software can be a better option in manner to use the latest technology for the
procurement. Continuous education and proper training will also be helpful in ensuring better
strategic procurement.

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Supply Chain Risk
It is not possible to prevent unexpected event related to the risks to the business as
stated earlier. However, certain measures could be taken in account of predicting the threats
and risks before it happens in reality in manner to minimize or eliminate the impact of
disruptions to the extent level (Cagliano et al., 2017). There are five major areas those could
affect the smooth flow of the supply chain that includes the price, reputation, quality, legal
and delivery of the products or services.
Price risk
Inflation and volatility are the two major factors those could lead to the price exposure
for the business. Sudden upswing in the prices could be devastating in manner to the expose
in the positioning in the market. Setting long term contract could be a key aspect in manner to
control such degradation in the market and could minimize the impact of the rise in price in
the future. This could result in the loss of agility and could seriously affect the supply chain
of the business. Volatility can be stated as the sudden and rapid movement of the markets in a
pattern that cannot be predicted that results that even a small difference in the price could
lead to the difficulties in forward planning.
Quality Risk
Consequence of mundane failure can be very severe for example packaging the
cardboard turns to be floppy and wet could lead to the entire assembly of the products to be
distorted while transporting. A range of methodologies can be implemented within the quality
risk management that includes six sigma and many more in manner to bring scientific
assurance for the mass production and successful delivery of the product. Six Sigma could be
helpful in assuring and providing guidance in manner to automate and enhance the output of
the organization through minimizing the human errors (Perrenoud et al., 2017).

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Delivery risk
The purchasing and the logistic teams are the first who are blamed for the failure in
delivery of the product or the services. There are many ways in which this could affect the
business those include early deliver, late delivery, or not delivery. This latter could be a
burden for the business operating just-in-time models because the aim of the suppliers is to
free the warehouse from the products through delivering the shipments early. A very crucial
objective should be given concern if an individual wants to take the business to the top in the
competitive market.
Legal risk
Illegal act attempted by the supplier could also affect the supply chain of the business
for example UK Bribery Act, where the supplier acted illegally and the clients had to suffer a
big penalty in the business. (Warmerdam et al. (2017) stated that “Training suppliers and
purchasing managers to be aware of the law and take a zero tolerance attitude to any illegal
actions is the only way to ensure that prosecutions are avoided.”
Reputational risk
Reputation of the organization is very crucial objective related to the success and
increment in the productivity of any business. Behzadi et al. (2017) defined it as relation to
the “practices which the general public believe that businesses should be conducting and
brands are tarnished when organizations have been viewed to contravene a moral code, if not
legal obligation.”
The key objective related to the procurement professionals is to monitor and evaluate
the actions of the suppliers. The customers or the consumers do not consider any difference
between the supplier and the buyer in the supply chain that leads to the proper availing

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services and the products could result in the enhancement of the performance of the
organization and increasing its productivity.
Risk Management
Risk management can be defined as the group of actions those could be helpful in
mitigating and managing the risks and threats that could affect the supply chain or any other
system within the organization (Fauzi, Tanuwijaya & Wulandari, 2017). A successful risk
management follows a process cycle that includes risk identification, analysis, response, and
monitoring and controlling.
Risk Identification:
This is the very first step in the risk management that is responsible for identifying the
factors related to the activities within the organization that might affect the performance of
the organization and stop the organization from achieving its goals. According to Jeynes
(2012) there are 10 Ps that could be involved in this process that includes:
 People elements: people/procedures they follow/protection
 Physical properties: premises/product/purchasing supplies
 Management issues: policy and strategy/planning and organizing
 Actions or processes: processes/performance against targets
Risk Analysis:
This is the next step after the risk identification has been completely achieved that
includes the qualitative and quantitative analysis on the risks those have been already
identified. Qualitative analysis could be referred to the technique that could be helpful in
discovering the probability of the events related to the risks, occurring and the impact of the
identified the risks if it happen during the execution of the project. It could lead an individual
to prioritizing the risks those have been identified and rating them according to the priority

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(Horner & Wilmshurst, 2016). Risk matrix could be a better option in manner to prioritize the
risks and prioritize the risk according to its severity and the impact.
Quantitative analysis can be referred to the prioritization of the risks based on the
numerical value of the severity of the risks. A quantitative analysis includes the following:
 Providing a quantitative approach ion manner to make decisions during the time of
uncertainty
 It could Quantifies the outcomes those have the possibility for the project and
assessing the probability that could be helpful in assuring the achievement of the
goals of the organization
 Creating achievable and realistic scope, schedule, or cost targets
Risk Response
Risk response is an action plan that should be made after identifying and prioritizing
the risks that could be helpful for the individual in responding to assessing the risks. There
should be a proper strategy in manner to respond the risk that includes starting with the risks
of high impact and leading to the assessment of the risks with less impact. This could be
divided into two groups including the positive and negative threats (McGregor & Smit,
2017). Risk response includes the following objectives concerning the risks:
 Risk Share
 Risk Avoidance
 Risk Reduce (mitigate)
 Fallback (contingent action)
 Risk Acceptance
 Risk Transference

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Risk Monitoring and Control
This is the last step in the risk management process that states about monitoring the
process in the growth of the risk assessment and control the objectives and stakeholders
related to these risks. Risk register is a better monitoring and controlling tool that enables the
individual in successfully monitoring and controlling the risks that might affect the growth of
the business.
Complex Models of Project Risk and Procurement Management
There are various models those have been proposed in manner to lead to the
successful risk identification and procurement management systems within the organization.
This could have been possible through the incorporation of analytics and advanced
techniques. Machine learning and other innovative technologies are being implemented in
manner to mitigate the risks those might affect the smooth functioning of the organization.
Stress testing and capital provisioning are some of the regulatory requirements those have
been incorporated within some of the models. Irrespective of such models, there are very new
models those have been introduced and are complex in nature and are playing their vital role
in fulfilling the needs related to the business (Wook et al., 2016). These models are much
complex in nature and are capable of providing facilities like strategic planning, asset-
liquidity management, and pricing management that could lead to the enhancement in the
performance and productivity of the organization. As the world is getting digitalized and big
data and data mining are playing their role in enhancing the way of living that resulting in the
more complex nature for the models including the fraud detection and anti-money laundering
in addition to the customer relationship management. This could let the individual in perform
the business and enhance the performance of the organization with much efficient and
effective manner. For example JP Morgan Chase & Co., One of the greatest financial

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corporation in London that has been using the risk model in manner to mitigate the risks and
lead to the smooth functioning of the organization.
Example:
Even having a risk model and measurement for the risks, JP did neglect the
consequences and change the VaR metric in the early of the 2012. Because of small errors in
the spreadsheet, those were represented had been estimated the rate of the risk to be 50%.
Warmerdam et al. (2017) that “the result presented in the spreadsheet allows the
organization’s portfolio in manner of growing rather than that the JP Morgan was hit by the
crisis of sovereign debts reported it. Due to less precise model of the project risks and
procurement management the bank had to suffer a loss of 7 billion pounds since that time.”
Theory concept and models
The objectives related to the decision making should be based on all the facts those
have the capability to influence the decision-making of the individual who are responsible for
the enhancement in the performance of the organization. These decisions also include the
objectives related to the choices made during the uncertainty and risks. Uncertainty and risks
are the parts of the organization or the project and could lead the organization towards other
path and resist it from achieving its goals. For example, Toyota had once faced an external
risk that includes the earthquake and had affected the organization in many ways. This had
affected the production, output and reputation of the organization. Sandgrove (2016) stated
that “if the decision-maker, who is responsible for the strict decisions in the organization,
would be able to assess intuitively or rationally, the decisions could be made under certain
risks”.
Example:

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Models of subjective utility can be helpful in understanding the facts those were
related to the decision point that two individuals might not meet at the same decision point on
the utility curve. Behzadi et al. (2017) concluded, “Same normative axiom those seems to be
striving to the maximum subjective utility defined by each individuals separately.” (Cagliano
et al., 2017) stated, “Prospect theory is a theory of decision-making under conditions of risk.”
According to the theory, the decisions made during the execution of any project within the
organization will be involving the value trade-offs under internal conflicts. These theories are
capable of explaining, predicting, and describing related to the measures that could mitigate
the issues and risks related to the organization or the project. “The theory can be helpful in
describing the choices that could be used as frames and evaluation of the choices while
making decisions related to mitigating the risks in the project life cycle” (Hopkin, 2017).
Importance of risk management
Risk management can be helpful in maintaining the sustainability of the organization
in the competitive market. This could also be helpful in assuring that the performance and
growth of the organization will not face any difficulties due to some unwanted entities. Risk
is an integral part of any development as stated earlier and it cannot be eliminated from the
system however, it can be reduced to the minimum level (Wook et al., 2016). Risk
management ensures the prioritization for the risks that could be helpful in adhering the most
impacted risks and issues and protect the organization from falling down. This will help in
boosting the productivity and growth of the organization.
Conclusion
Based on the above report it can be concluded that the organization might be able to
achieve the highest efficiency in the rate of the growth through proper risk mitigation
process. This report presents an idea about how an organization can chose the proper supplier

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for the enhancement and smooth flow of the organization. Prioritizing the risk because of
qualitative analysis and preparing the risk matrix can be recommended as the best approach
for leading any project to its success. Followed by this, the risk response should be made
according to this priority or severity matrix in manner to mitigate the threats at the very early
stage and lead the growth of the organization unaffected by such threats. Various examples
have been proposed in this report in manner to relate the theory with the real world and put
emphasis on the effectiveness of the risk management process ion manner to ensure the
growth of the organization. This report presents a critical evaluation on the articles those have
been posted by reputed authors and based on that it can be concluded that risk will always be
there in any project and can influence the organization in both positive and negative manner.

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References
Behzadi, G., O’Sullivan, M. J., Olsen, T. L., & Zhang, A. (2017). Agribusiness supply chain
risk management: a review of quantitative decision models. Omega.
Brindley, Clare, ed. Supply chain risk. Taylor & Francis, 2017.
Cagliano, A. C., Grimaldi, S., Mangano, G., & Rafele, C. (2017). Risk Management in
Hospital Wards: The Case of Blood Procurement and Handling.
Fauzi, D. B., Tanuwijaya, H., & Wulandari, S. H. E. (2017). RISK MANAGEMENT
PLANNING PROCUREMENT PROJECT IT USE ISO 31000 IN PT. PELABUHAN
INDONESIA III. Jurnal JSIKA, 5(7).
Glendon, A. I., Clarke, S., & McKenna, E. (2016). Human safety and risk management. Crc
Press.
Hopkin, P. (2017). Fundamentals of risk management: understanding, evaluating and
implementing effective risk management. Kogan Page Publishers.
Horner, C. A., & Wilmshurst, T. D. (2016). STAKEHOLDER ENGAGEMENT AND THE
GRI: IMPLICATIONS FOR EFFECTIVE RISK MANAGEMENT. CORPORATE
OWNERSHIP & CONTROL, 210.
Jeynes, J. (2012). Risk Management: 10 Principles. Woburn: Butterworth-Heinemann
McGregor, A., & Smit, J. (2017). Risk management: Human rights due diligence in corporate
global supply chains. Governance Directions, 69(1), 16.
Perrenoud, A., Lines, B. C., Savicky, J., & Sullivan, K. T. (2017). Using Best-Value
Procurement to Measure the Impact of Initial Risk-Management Capability on

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Qualitative Construction Performance. Journal of Management in Engineering, 33(5),
04017019.
Sadgrove, K. (2016). The complete guide to business risk management. Routledge.
Warmerdam, A., Newnam, S., Sheppard, D., Griffin, M., & Stevenson, M. (2017).
Workplace road safety risk management: an investigation into Australian practices.
Accident Analysis & Prevention, 98, 64-73.
West, G. H., Lippy, B. E., Cooper, M. R., Marsick, D., Burrelli, L. G., Griffin, K. N., &
Segrave, A. M. (2016). Toward responsible development and effective risk
management of nano-enabled products in the US construction industry. Journal of
nanoparticle research, 18(2), 49.
Wook, K., Beresford, A. K. C., Pettit, S. J., Mason, R. J., & Sanchez Rodrigues, V. (2016).
The roles of corporate culture in the selection of effective risk management strategies.