Top 2023 Business Risks for Procurement: Are You Prepared?

Procurement professionals must remain vigilant to mitigate risks and maintain resilience. The ever-evolving business landscape presents new challenges that require proactive management.
 
Here are the top 10 business risks, in random order, procurement professionals should be aware of in 2023:
 
1️⃣ Inflation: Inflation can increase the cost of goods and services, eroding profit margins. Procurement must be proactive in managing supplier relationships and identifying cost savings opportunities.
 
2️⃣ Talent Shortage: The inability to fill critical roles in procurement can hinder operational effectiveness and overall performance. Invest in employee development, retention, and recruitment strategies.
 
3️⃣ Economic Contraction: With the potential for an economic downturn or recession, procurement must prepare for potential budget constraints and focus on cost savings.
 
4️⃣ Cybersecurity Risks: Cybersecurity risks can lead to data breaches, reputational damage, and financial loss. Procurement must prioritize cybersecurity in supplier selection and monitor compliance.
 
5️⃣ Geopolitical Instability: Geopolitical instability can disrupt supply chains and increase the risk of sanctions and tariffs. Stay abreast of geopolitical developments and assess the potential impact on procurement operations.
 
6️⃣ Unexpected fluctuations in commodity prices: Fluctuations in commodity prices can impact supplier costs and profitability. Monitor commodity markets, negotiate contracts with suppliers,
and consider hedging.
 
7️⃣ Digital Transformation Challenges: Failure to successfully transform procurement operations can hinder competitiveness and efficiency. Develop a digital transformation roadmap and invest in technology solutions.
 
8️⃣ Consumer Preference Shifts: Changing consumer preferences can impact demand and require adjustments to
go-to-market strategies. Monitor consumer trends and adapt procurement strategies accordingly.
 
9️⃣ Supply Chain Disruptions: Disruptions in the supply chain can lead to delivery delays, inventory shortages, and cost increases. Develop contingency plans, monitor supplier performance, and diversify supply sources.
 
🔟 Regulatory and Disclosure Change: Regulatory and disclosure
changes such as ESG, taxation, healthcare, and immigration can affect procurement operations. Stay updated on regulatory changes and assess the impact on the supply chain.
 
In summary, the procurement function must be proactive in identifying and managing these top 10 risks. Continuously assess
the impact of these risks on procurement operations and develop contingency plans to maintain resilience. By staying vigilant and adaptable, procurement can navigate these risks and ensure business success.