In public procurement, effective risk management is essential to ensure project success and regulatory compliance. Developing an appropriate risk matrix is a crucial step in this process. In this article, we look at the key steps involved in creating an effective risk matrix tailored to public procurement.
Identifying specific risks
The first step is to identify the potential risks associated with the procurement. These may relate to the quality of the product or service, delivery delays, price fluctuations, regulatory constraints, etc.
Risk classification
Once the risks have been identified, it is important to classify them into different categories to better understand and assess them. The most common categories are financial, operational, legal, technical and environmental.
Assessing probability and impact
Assess the probability of occurrence and the potential impact of each risk identified. Use a rating scale to quantify these factors and get an overview of the severity of each risk.
Building the risk matrix
Create a table with the risks listed on the vertical axis and the probability and impact levels on the horizontal axis. Use colour codes or symbols to indicate the level of risk associated with each cell.
Analyse results and prioritise risks
Analyse the results of the risk matrix to identify the most critical risks and areas requiring particular attention. Prioritise these risks according to their potential impact on procurement and contracting objectives.
Development of mitigation strategies
Based on the results of the risk matrix, develop appropriate mitigation strategies to reduce the risks identified. This may involve implementing internal controls, diversifying sources of supply, reviewing contracts, etc.
Regular monitoring and review
Make sure you regularly monitor and review the risk matrix to reflect changes in procurement. Adjust your mitigation strategies as risks change and new threats emerge.
Conclusion
Developing an effective risk matrix is key to ensuring successful and compliant procurement and contracting projects. By following these simple steps, you can create a risk matrix tailored to your organisation, strengthening its resilience in the face of market challenges.
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Risk management in public procurement