The Risk Management Process

Risk Managementa 2 step process:

1.      Identify and analyze exposure.

2.      Determine how best to control minimize and reduce the impact of uncertain events to that exposure.


Risk Management Questions

1.      What do you want to happen in the marketplace?

2.      What do you think will happen in the marketplace?

3.      What can you ill-afford to have happen in the marketplace?

4.      What are you actively doing to achieve what you want, while protecting against what you don’t want to happen?


Goals—what are your pricing goals?

Each customers goals are as diverse as the customers themselves…but most fit in the categories below.

1.      Stabilize pricing

2.      Margin protection

3.      Attain budget

4.      Eliminate /Reduce surprises


Once these basic parameters have been identified, we will formulate a procurement strategy that optimizes the pricing goals and provide a stable cost horizon.

Then all that’s left to do is the step best summarized in a quote attributed to Winston Churchill:

“However beautiful the strategy, you should occasionally look at the results.”