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Managing the risks imposed by suppliers and third-party service providers has become increasingly difficult and expensive. At the same time, the risks imposed by these relationships keep on getting larger and more costly. Yet procurement and risk personnel are expected to do more with less.
In this report, we discuss a new approach, which can help reduce both the cost of diligence and the risks. This report is organized into four sections:
- Outsourcing and Compliance: Supplier Risk’s One-Two Punch—How the trend towards outsourcing, combined with ever-greater regulatory burdens, has made managing supplier and third-party risk increasingly important, difficult, and expensive.
- The Quandary of Mid/Lower-Tier Supplier Management (Shortcomings of Supplier Segmentation and Decentralized Procurement)—Why the traditional approach to prioritizing supplier management resources falls short when it comes to managing risks. And how decentralized procurement exacerbates the problem.
- A Case for Co-managing Supplier Risk—A new approach: How segmenting risk tasks and having a third party co-manage the tactical risk tasks can reduce costs and risks simultaneously.
- Appendix A: Criteria for a Third Party Provider—What to look for in a provider.
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