July 31, 2006
Role of Enterprise Risk Management in Outsourcing
It has been noticed that companies import risk from external organizations via links through enterprise resource planning (ERP) and supply chain management (SCM) systems. However, the fastest growing source of importable risk is from your outsourcing partners. Evidences suggest that the quantity and scope of enterprise risk from outsourcing is expanding rapidly. Many small and medium sized companies are now relying on outsourcing through their IT systems.
Although outsourcing brings efficiency and cost saving, a poorly managed outsourcing relationship may put your entire IT system at risk. When you have options, why take a risk? It is strongly recommended that ERM must be extended to your outsourcing partners. That will definitely negate the strategic and market risks associated with your organization.
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