Assessment of risk

When starting a procurement exercise, it is necessary to make an assessment of risks that may arise during the exercise. Factors such as the value, political profile and the importance of the proposed procurement will determine the potential for risk and indicate the time and effort to be used in completing an assessment.

For example, minimal risk assessment will be given to the replenishment of stock items and the challenge function of what is needed will usually suffice. However, the larger the requirement, the more detailed consideration should be given to potential risks.

Potential risks that should be considered include:

  • the procurement exceeds allocated budget
  • the goods/services are not delivered on time
  • the goods/services selected do not meet the users' expectations
  • there is a technology shift between the procurement selection and delivery
  • there is a change in the strategic direction of the institution/department

Risk assessments have been provided for each stage of the procurement cycle.

More detailed guidance and information from other sectors where the principles applied could be useful are the Risk Allocation Model from central government and the Risk Management Standard from the Institute of Risk Management.  Also see our A Guide to Managing Risk.