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Perception of Risks. Frederick Trotter Director – Insurance & Assets Georgia Institute Technology. PERCEPTION OF RISKs.
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Perception of Risks Frederick Trotter Director – Insurance & Assets Georgia Institute Technology
PERCEPTION OF RISKs No matter what your specific specialty as a procurement professional your job is about managing and quantifying risk and compliance. In order to do so, you must oversee hundreds of contracts, agreements and MOU’s to ensure they aren’t hiding obligations, service level agreements, metrics, or other liabilities that could expose potential risk.
PERCEPTION OF RISKs • You must also know or at a minimal know where to “go” to review and research for a new contracts. Just as importantly, renewal contracts may often reflect outdated policy language, be subject to new regulatory mandates or evolving legislation that may impact requirements, which may require or need to be flag for revisions or audits as needed.
PERCEPTION OF RISKs • Wouldn’t it be ideal if your organization had an intuitive dashboard that let you search, sort, review, and compare contract data, across the entire contractual platform? • With the capability to locate all contracts across your network, ensuring there are no hidden liability or land mines lurking in a file server somewhere, extracting all wording, agreements and MOU’s displaying the various terms, conditions and contractual provisions right out of the box…
PERCEPTION OF RISKs • Well guess what that system does exist... It’s a part of the Perception of Risk factor and it involves… • You !
PERCEPTION OF RISKs • PERCEPTION • Is often thought of as the fundamental processing in our awareness and interpersonal communication encounters. • It’s involves stimulation, organization, understanding, memory and recall. • It's often associated as the physiological process through which everything in “our” world is interpreted, understood and influenced.
PERCEPTION OF RISKs • PERCEPTION CONT. • It would appear that perhaps these and more would be correct, but for today’s presentation let’s narrow down the process of perception into 3 stages: stimulation, organization and understanding. With a thought process that the characteristic nature of the procurement process includes dimensions of perceiver, ethics, collaborator and execution of the target.
PERCEPTION OF RISKs • PROCUREMENT PROFESSIONAL • Procurement is changing. It used to be about acquiring products and services for the best price. Now, it’s also about providing analytics and guidance to make better business decisions. As a procurement professional, you have a strategic role to play beyond simply controlling expenses, you’re now also expected to manage legal and regulatory exposures, while providing valuable intelligence to key stakeholders. That in turn has led to new challenges…
PERCEPTION OF RISKs • PROCUREMENT PROFESSIONAL CONT. • For example, you may find yourself responsible for a much broader range of objectives such as: • Increasing savings by rationalizing suppliers, negotiating better deals, and taking advantage of incentives. • Assessing risk by getting a clear understanding of your service level agreements (SLAs) and whether liabilities are covered by insurance terms and conditions. • Driving efficiency by reducing the time and money it takes to search for specific contracts and contract terms makes life easier. • The “how” in achieving any of these goals can be difficult and even harder to extract, understand, and manage. • I would image it often like….
PERCEPTION OF RISKs Siduhe River Bridge in China is the tallest in the world.
PERCEPTION OF RISKs • Sole Source • Bid • Fund Source • Intellectual Property • Mark Up • Confidentially • Software License • Rights to Data • Payments • Title Pass • International • FOB Destination
PERCEPTION OF RISKs • Sub Agreement • End User Agreement • Lease To Own ( Purchase) • Down Payment • No on Progress Payment • Negotiation • Redline • Terms • Conditions • Interest • End User Agreement
PERCEPTION OF RISKs • MANAGING RISK • Risk is a discipline that understands that some potential event might cause harm. It utilizes methods, strategies and techniques to not only identify but also confronts potential risks that might cause harm and prevent a project or department from completing it’s operation mission. • The need for managing risk can be determined by answering three (3) unqualified questions: • 1. What could go wrong? • 2. What will happen during the incident and the aftermath of the ordeal? • 3. What will be the “cost” and who will pay for it?
PERCEPTION OF RISKs • RISK TRANSFER: CERTIFICATE INSURANCE • In the procurement process, it seems you are either asking someone to sign a contract or being asked to sign a contract daily. With so many contracts, and the complexity involved, it can often be difficult to accurately assess your risk exposures. Yet oversights and mistakes in this process can be extremely costly. • Establishing proper insurance requirements and obtaining certificates of insurance that outline compliance with these requirements are an important risk transfer practice. This may reduce your chance of unknowingly accepting the liability of someone else or being exposed to additional liability stemming from the action of others.
PERCEPTION OF RISKs • RISK TRANSFER: CERTIFICATE INSURANCE • Gathering certificates to simply confirm they are received is not sufficient. It provides no guarantee that all of the requirements have been met. But if you take the time to confirm the insurance requirements, limits, and endorsements on these certificates you can transfer exposures to your vendors. • Maintain organized files, including the construction contracts, certificates of insurance, and additional insured endorsements. • Set up a suspense system, manual or automated, to track the certificates’ policy expiration dates. This helps you to be able to contact the subcontractor and request a current certificate of insurance prior to expiration. The most effective solution would generally be to utilize a certificate management system. These systems offer a way to take work off your desk by handling the requesting of certificates, compliance verification, and follow up on non-compliant and expiring certificates.
PERCEPTION OF RISKs • COLLABORATION • Interaction at Georgia Tech connecting: • Research • Procurement • Legal • Insurance
PERCEPTION OF RISKs Trained as an electrical engineer, Fatih Sarioglu studies how microsystems, sensors and computational analysis can fight cancer. His Biomedical Microsystems Laboratory at Georgia Tech is creating smart chips that can diagnose and monitor cancer through blood analysis.
PERCEPTION OF RISKs • 3D Printed Tracheal Splint Used in Groundbreaking Pediatric Surgery
PERCEPTION OF RISKs • THE FUTURE • The procurement leaders of tomorrow will have to adopt a different worldview than their counterparts in the past. To adapt to this evolution, savvy chief procurement officers are already thinking about ways to find and nurture the next generation of procurement leaders, which will require them to assess their intellectual and geographic diversity and recruiting sources: • New blood: Procurement teams will expand and attract more people with backgrounds in education and professional services, making it one of the more intellectually diverse organizations within the enterprise. • New cultures: Geographical shifts into new or emerging markets will require procurement teams to recruit a more diverse workforce that can design buying strategies that will be more relevant to local social and cultural dictates. • New mindsets: Doing business in a more transparent society will require procurement organizations to go far beyond “corporate social responsibility” and actively participate in a wholesale reevaluation of the corporate-social relationship. • New profiles: The profile of the traditional buyer who counted success through hard-won negotiations that “didn’t leave any money on the table” will be replaced by procurement teams that adopt a multidimensional approach to managing the supply chain. While reducing costs will continue to be important, it will not be the overarching factor in all negotiations.
PERCEPTION OF RISKs • QUESTIONS ?
