These days many companies rely on vendors to perform different services that they used to do in the past. When a company relies on vendors, they should be involved in vendor risk management. The first step in this risk management is to evaluate the seller risk for each potential seller. When managing risk, there are many areas to look for risk assessment processes. The first area to consider is organizational risk. It is an assessment of employees in a seller's company. A good sign of a healthy company is a happy, stable workforce. When you look at the seller, what do you see? Do people seem to stick to the company, or is there a lot of turnover between senior-level people and the general population of workers? What sort of? Are employees voluntarily resigning? Look at the higher level. Are the President, President and CEO all in the same family or the same person? How many members of the board are outside the company? Are there high-level employee roles as a leave to other high-paying employees? Probably the biggest organizational red flag is if senior executives sell their stock. The next area for risk assessment processes is the financial sector. How much financial risk does the seller present? In this area, it is important to look for patterns rather than just one or two risk factors. How much cash does the seller have in the bank? What kind of credit rating do they have? Will they be able to get finance or negotiate a loan to improve the business? Worst of all, have they ever declared bankruptcy? Take a look at their return on equity, return on investment and assets. The third support is risk. Again, the retrenchment of the hiring staff to the seller you hired increases the risk through your company. Does this reduce the level of service you are accustomed to and expect to receive your money? Are skilled workers being replaced by new workers who lack levels and skills and support? Do you see other fellow customers leaving your seller? What do they know that you don't? Is their product quality declining, is there a lack of parts, and is there a lower level of support for their products? Another important risk to evaluate is the risk of the seller's strategy. Assessing the risk of the strategy sees the seller at a high level with the help of Riskcom. Is the highest level a set of instructions that defines a seller's overall mission? May indicate a sudden change in instructions, invisible changes in the configuration or a decrease in the height of the seller's vision. Keep a close eye on the seller's sudden change in seller and marketing approach. Is the size of the new deal going down? What is their strategy or industry focus? Are you still comfortable with them?The risk assessment processes associated with your vendors is a daunting task, but the health of your company depends on their health.
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