Strategic sourcing

2009-03-26 00:00

Risk is defined as "uncertainties about an enterprise that are understood and managed to achieve its objectives and add value."

The identification and ongoing assessment and management of risks that are linked to an enterprise's strategic objectives are essential elements of business success.

Focused risk workshop sessions are effective vehicles for the identification of these risks. During these sessions, risks are identified by enterprise management, and a rating applied to each individual risk according to the perceived impact on operations.

The outsourcing of the facilitation of a workshop of this nature to risk management specialists is key to achieving the desired results and maintaining the right focus. The deliverable arising from a service of this nature is a risk register report, presenting identified risks that the enterprise will be able to utilise in the monitoring of their risk environment.

The current internal controls that management perceive to be in place over these risks are also recorded and measured at these workshops. In order to provide management with satisfaction as to the effectiveness of these controls, the option of outsourcing an Internal Audit function to test and evaluate the controls is available.

The Internal Audit function will audit the various operational processes ranging from Human Resources to Inventory Management. During these audits internal control gaps are identified, and leading practice recommendations are provided to management.

When reviewing the outsourcing option, it is important to consider that an organisation can:

* Gain access to highly skilled and experienced professionals as well as leading technology;

* Obtain a fresh perspective and an added level of scrutiny;

* Eliminate internal audit training, recruiting costs, and fixed payroll costs

* Enjoy greater staffing flexibility, especially as special projects arise and the enterprises needs change

Strategic sourcing will provide management with clearer operational direction, and assist in the achieving of strategic objectives.

Alex Winterbach - Manager, Internal Audit, Risk and Compliance Services at KPMG

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