Webinar Wrap-Up: How to Take the Lead in Managing Risk
“In today’s rapidly evolving world of procurement, collaboration is key to success. You can either collaborate or stagnate,” said Tania Seary, founder of Procurious, as she kicked off the third and final part of our Collaborative Procurement series.
In partnership with SAP Business Network, our latest webcast brought together leading voices in procurement and risk management, including Richard Downs, VP and Head of Business Network Product Marketing at SAP, Sydney Stewart, Lead Americas Analyst at Sibylline Ltd, and Derek Leatherdale, Senior Geopolitical Risk Advisor at Sibylline Ltd. The speakers brought a wealth of experience as they explored the many ways procurement teams can leverage collaboration to take the lead in managing risk within their organisations.
Understanding the Importance of Managing Risk
Tania Seary set the stage by highlighting the importance of risk management in procurement. She stated, “As we head towards 2025, the top priorities for procurement teams are cost containment, sustainability and ESG, supply chain resilience, and regulatory compliance. With procurement teams losing confidence in their ability to manage risks, it’s clear we need to change our ways of working to get on top of our vulnerabilities and have the confidence to take the lead!”
Richard Downs expanded on this by discussing the various risks faced by procurement teams, including supply chain disruptions, regulatory compliance, sustainability planning, and supplier management. He emphasised the importance of collaboration and shared, “Disruptions are becoming more frequent as the world shrinks and we are far more connected and therefore risks, and how we can mitigate them are rising on the agenda.”
Collaboration as a Solution to Risk Management Challenges
Downs also highlighted several common roadblocks to effective collaboration in managing risk.
“Number one is prioritisation. Traditional pre-Covid perceptions of procurement and supply chain still exist, with the C-suite often underestimating our strategic value, viewing us as a cost centre rather than a driver of growth and customer satisfaction. This disconnect can make it challenging to secure the necessary resources and support for initiatives that enhance resilience and risk management capabilities.”
A recent study by EY noted that almost constant disruptions are changing this attitude, however the C-suite is still prioritising financial outcomes over strategic objectives.
Downs also mentioned data silos and technology gaps as barriers to effective collaboration among teams, with many organisations struggling to effectively leverage data for supply chain management and risk assessment, despite the increasing adoption of data lakes.
Derek Leatherdale provided insights into the evolving geopolitical landscape and the complexities it introduces to supply chain management. “Not only have business models changed, but the geopolitical environment has degraded as well, making the job of assessing and validating supply chain integrity more challenging.”
Procurement’s Top Risk Drivers
While procurement teams seemingly face a never-ending number of risks, the webinar focused on the following key areas.
ESG: A Key Boardroom Topic
According to Accenture, 34% of major global companies have set net-zero targets, but 93% of those risk failing without significant effort. And, in a recent SAP survey, 39% of respondents cited compliance as the main driver behind becoming greener.
However, according to Downs, the motivation driving ESG initiatives is far more complex than just compliance, citing an interplay of market forces, stakeholder expectations, and a growing recognition of the business value of ESG.
Regardless of the driving forces, organisations across the board agree navigating the uncharted waters of ESG can lead to a number of business risks. A commonality among companies that have gotten it right: establishing a clear strategy that aligns with business objectives and embedding sustainability into day-to-day operations. This requires collaboration among internal stakeholders and suppliers.
Collaboration among risk and compliance teams is particularly important. “Risk and compliance teams can play a pivotal role in supporting procurement to achieve ESG targets. Their expertise in risk assessment, compliance frameworks, and stakeholder engagement is essential for building sustainable and resilient supply chain,” shared Downs.
Regulations and Legal Risk: Constantly Evolving
Collaboration with risk teams is also a critical component of mitigating regulatory and legal risks.
“Engaging with risk teams whose job it is to identify emerging risks across a given country/regional landscape will ensure you are not just chasing headlines but are able to identify those risks as they first come into the line of sight. Organisations should be ‘early adopters’ by adopting risk mitigation strategies as soon as a pertinent risk is identified,” said Sydney Stewart.
New e-invoicing legislation, for example, is top of mind for many procurement teams. So far, over 100 countries including Italy, Germany, Poland, Greece, France, and Romania have enacted mandatory e-invoicing legislation, and additional e-invoicing mandates are spreading rapidly as countries including Australia, Japan, New Zealand, and Singapore adopt the EU model to their specific needs. For global organisations with operations in these countries, compliance will be critical.
Another significant law that has consumed the attention of procurement and supply chain teams is Germany’s Supply Chain Due Diligence Act, which among many things, requires large companies to implement a supplier risk management system. The EU Supply Chain Directive (also known as the Corporate Sustainability Due Diligence Directive or CSDDD) came into force in July of this year and all EU member states will be responsible for compliance by 2026.
Stewart also highlighted the potential regulatory shifts following the outcome of the U.S. election: “Trump will likely revoke China’s ‘most favoured nation’ trade status, elevating supply chain and operational risks. This would effectively repeal the normal trade relations and tariff reductions granted by the US to China after it joined the World Trade Organization (WTO) in 2001. This move, along with the imposition of further tariffs, would likely result in a large shock to the global trading system, straining relations between the US and its allies.”
When asked how organisations can mitigate these risks, Downs suggested, “Diversifying your supply chain and implementing a multi-sourced strategy for key components is essential.”
Building Resilient Relationships
ESG and regulations are constantly evolving, but by collaborating with internal teams, suppliers, and technology, procurement can manage these risks effectively.
Richard Downs advised, “Prioritise building strong, transparent relationships with suppliers. By fostering trust and cooperation, you can better anticipate potential issues, respond swiftly to disruptions, and ensure a more resilient supply chain.”
Sydney Stewart also highlighted the need for collaboration among teams to recognise ‘Black Swan’ scenarios: “Events typically thought of as ‘Black Swans’ (high impact, low probability) – must be appraised and planned for. There is going to be a substantial uptick in geopolitical risk in the coming years, so some of those ‘Black Swans’ are more likely than previously thought.”
Don’t Miss Out on the Full Discussion
This article has shared just a small snippet of the enlightening conversations throughout the webinar. If you want to learn more ways procurement teams can leverage collaboration to take the lead in managing risk within their organisations, we invite you to watch the full recording.
You can watch Collaborative Procurement: How to Take the Lead in Managing Risk on-demand by clicking this link.
