Increase Compliance with Risk Management

Determining supplier risk has become an increasingly important part of procurement. Gaining insight into procurement risks has long been known as the Kraljic analysis at the procurement package level. In recent years, the focus has increasingly shifted to having to monitor risk at the supplier level in order to meet the compliance expectation of regulators and other auditors. By using Risk Management in Vendor Management, you achieve higher vendor compliance. 

All suppliers support your organisation's services, but how does this affect the service you provide to your customers? To determine the risk you face with a particular vendor, you need to classify that service internally. By creating internal questionnaires, you can uniformly determine vendor classification and capture it in Vendor Management.

An internal classification of your supplier and service is often not sufficient for regulators and auditors. To properly assess the risks you as an organisation face with suppliers, the supplier should also answer questions regarding internal processes and measures taken by the supplier. You can therefore conduct a Risk Assessment. You can create different types of questionnaires based on the classifications and have your supplier answer them through Vendor Management's Supplier Portal.

Based on your vendor's answers, you as an organisation can properly assess whether it meets your organisation's expectations, certifications and requirements. The various topics for which you ask questions about are translated into scores in terms of impact and opportunity. A combination of these two elements creates an automatically calculated residual risk. High residual risk means that, despite the answers provided by the supplier, there is still an increased risk that something can go wrong. You can mitigate these residual risks by placing internal and external tasks on a Planboard. These tasks are performed during the collaboration with the supplier. In this way, residual risks are minimised.

Within Vendor Management, we work with smart workflows to review the information entered. By using workflows, you ensure that the right people within the organisation review the information entered before it is stored in the vendor file.

Monitoring risk is not just about internal supplier risk ratings. It is also about a supplier's financial health. Monitoring such risks is best done through so-called financial ratios. These ratios provide scores on interrelationships between financial data such as profits, sales and the balance sheet. In Vendor Management you can complete these yourself or have them fed through by external credit rating agencies such as A-Insights and Graydon.