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The purpose of risk management is to examine and control relevant risks, to ensure successful delivery of the project. It is essential that risk management begin early in the SCM process. High-level purchases and complex projects of lesser value require the preparation of a specific risk management plan and ongoing risk assessment throughout the project’s entire life cycle; however, in less complex and lesser value projects, a plan to deal with risk should be an element of the Individual Purchase Plan. During USPS Supplying Practices Process Step 1: Identify Needs, due attention must be paid to identifying risks, their impact, and possible Postal Service response to the risks. This stage is part of the larger risk management process, which evolves throughout the supply chain, and ensures that risks are understood and mitigated to the greatest extent possible.
A risk is a potential event or future situation that may adversely affect the project. Identifiable risk factors contribute to a potential risk. If a risk occurs, there will be consequences that may significantly impact the project. For example:
- Risk factor — a new technology is being used for the first time.
- Risk — adoption of the technology is more difficult than anticipated.
- Consequence — the delivery of a project is late.
A risk may be caused by more than one risk factor, and, conversely, a risk factor may result in more than one risk.
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