22 Examples of Procurement Risk

John Spacey, updated on August 29, 2023

Procurement risk is the potential for losses related to the purchase and delivery of products, services, components, parts, materials and resources. Common types of procurement risk include fraud, cost, quality and delivery risks. The following are common procurement risks:

Supplier financial failures or bankruptcy.	Low performing suppliers.
Deliveries that are delayed.	Potential for disputes with a supplier.
Supply chain disruptions	Exchange rate volatility
Political instability	Trade wars
Trade barriers	Price volatility
Global or regional supply shortages.	Transportation issues such as severe delays.
Warehousing issues such as a shortage of warehouse space.	Goods lost in transit.
Goods damaged in transit.	Suppliers that fail to meet contractual obligations to you.
Overreliance on a particular supplier.	A supplier negotiates higher prices.
Suppliers that damage people and planet.	Reputational risk related to suppliers.
Compliance issues related to a supplier.	Quality issues such as defective parts and components.

In many cases, procurement risks are also compliance risks as purchasing practices are typically governed by anti-corruption laws.

Examples

An executive grants a contract to a friend resulting in high costs and low quality results.

A government procurement agent is a former employee of a major supplier who has a conflict of interest resulting in high costs bids being accepted.

An employee is wined and dined by a supplier and feels obligated to choose their product or service despite quality issues.

Overview: Procurement Risk
Type	Risk
Definition	The potential for failures in a procurement process resulting in business losses and disruption.
Risk Treatments	Avoid Reduce Transfer Accept
Related Concepts	Supplier Risk Compliance Risk