Company leaders must manage internal and external risks
Jan 17, 2014
In a globalized but still unsteady economy, it's common practice for organizations to outsource some of their functions to external contractors. Doing so allows the businesses to reduce the costs of processes would be too time-intensive or expensive to do themselves. The action also enables corporations to focus efforts on their areas of expertise.
However, this trend has raised a red flag in industries such as manufacturing, utilities and other sectors that rely on contractors to sustain parts of their operations. In an interview with Outsource magazine, CFO Alliance chief executive and president Nick Araco said finance executives are getting more involved in managing operational risk in their corporations. "There is heavy emphasis on managing risks in areas around the supply chain of vendor and customer," he told the source. This could include internal as well as external threats.
As such, it's important that CFOs and other leaders tasked with overseeing contractors devise a risk management plan to protect their companies from outside threats and regulatory violations. While these executives may be primarily concerned with their own compliance, they should also be expanding their scope to include subcontractors and vendors, as these third parties can have a significant impact upon a company's risk profile.