Risk Management within Procurement
As risk management continues to gain widespread recognition and support throughout every level of the organization, Procurement has secured their position as a strategic business function and is often referred to as the “first line of defense” for enterprise-wide risk management efforts.
Despite corporate and board level directives, research indicates that the Procurement teams have been much slower to dedicate budget and resources to risk management initiatives than other business functions. Procurement also continues to struggle with risk assessment of suppliers and third parties at onboarding as well as throughout the life of the relationship.
Assessing Financial Health of Vendors, Suppliers, and Other Third-Parties
Assessing the financial condition of a vendor, supplier, business associate, or third-party service provider (TPSP) as part of the procurement due diligence process is not only an operational best practice but also mandated by regulators across multiple industries. Understanding the financial stability of the companies with which you do business enables you to monitor for potential risks, disruptions, and compliance violations that can cause losses or severe profitability issues. However, understanding the financial viability can also help you identify opportunities for strategic growth.
Rapid Ratings’ FHR® provides you with insight into the financial health of your global supply chain and third-party ecosystem. Accurate and actionable analytics highlight significant risks and opportunities for both public and private companies, globally.
The FHR helps procurement teams across multiple industries to:
- Identify, monitor, and mitigate supply chain and third-party risks
- Avoid business disruption and support business continuity initiatives
- Develop risk management strategies across multiple business functions
- Meet compliance requirements and avoid costly fines and penalties
Visibility into Financial Stability of Public and Privately Held Companies
Accurate and timely risk assessment of financial health is crucial to any risk management strategy for both public and privately-held suppliers and third-parties; however, obtaining financial information for private companies can pose a significant challenge. Attempting to collect financial information on private companies is not only time-intensive and cumbersome for internal resources, but can often become a futile effort as private companies refuse to provide their confidential information. Procurement should be able to focus on more strategic initiatives without needing to worry about collecting financial information.
Rapid Ratings recognizes the significant undertaking to obtain private company financial information and can help you resolve this challenge. Our Financial Statement Sourcing team works with hundreds of global clients to successfully obtain financial information from tens of thousands of private companies globally in order to provide information essential to making business decisions. All of this can be done in a confidential manner. No financial information is shared with other clients or third parties.
The FHR helps procurement professionals gain visibility into the financial strength of their suppliers and third-parties in order to make informed decisions, with its unique ability to predict financial stability over the next 12 months.
- Assess financial stability of public & privately held suppliers
- Increase efficiency and improve supplier relationships
- Enhance or build existing supplier risk management processes
- Avoid supplier disruption and protect your business’ bottom line