It’s All About Risk

In this episode of Proc-N-Roll our hosts Zach, Natasha, and Conrad tackle the crucial topic of risk management in procurement for 2025. Drawing from their combined 70+ years of experience, they discuss how procurement teams can prioritize and manage risks in today’s complex business landscape. The conversation covers everything from supply chain disruptions and regulatory compliance to practical strategies for building cross-functional partnerships. Using real-world examples, including the 2024 LA fires, the hosts share actionable insights on transforming risk management from a burden into a strategic opportunity for procurement leaders.

Watch now or read the transcript below.

Transcript: Proc-N-Roll 05 | It’s All About Risk

Zachary | Welcome to Proc-N-Roll, your guide to practical procurement where we make procurement rock and roll. Today we have Natasha, our pro-CPO, Conrad, our innovator, and myself, Zach, your expert on procurement. Together we bring over 70 years of practical procurement experience. Today’s topic is risk management – how it’s showing up on the business radar and how procurement is being asked to do more in risk management, especially in 2025’s rapidly changing landscape. Let’s start by asking Natasha and Conrad: what types of risks do you see in procurement?

Natasha | There are many different types. We have regulatory risk, supply chain disruption risk, pandemic risk, and government disruption risk.

Conrad | There’s also financial viability, cyber privacy, and labor concerns. The list of regulatory risks keeps growing. Some overlap with supply chain and business risks we’ve been tracking, but there are new concerns too. Europe is focusing more on sustainability and modern slavery, while Australia and the UK are ahead in certain areas.

Natasha | Labor risk is particularly interesting. One aspect is the lack of qualified labor preventing companies from advancing technologically. Another is the risk of unskilled labor affecting industries like transportation, hospitality, and restaurants. The gig economy is also rising – companies struggle to find full-time resources as people prefer consulting gigs.

Zach |  How do you see procurement helping mitigate labor risks? It’s not typically a procurement domain.

Natasha | Procurement is diversifying by bringing in people from finance, internal audit, and security. There’s also a trend of growing talent internally rather than external hiring. While these people might lack experience, they’re learning various procurement areas.

Zach | With so many risks, where should procurement professionals start?

Conrad |  While it’s easy to list risks, each business has unique risks based on their operations, lifecycle stage, industry, and competitive landscape. You can’t use a cookie-cutter approach. You need to understand your business and talk to people – procurement can’t do this alone.

Natasha | Risk management helps leaders shift from functional to enterprise thinking. You must partner with legal, tech, internal audit, and finance. These risks need funding, legal support, audit oversight, and often board attention. Tech partnership is crucial for implementing risk management systems.

The size of your company doesn’t necessarily determine risk levels. A small company handling contingent workforce might face similar risks to a large enterprise, though the depth and impact might differ. Organizations often must choose which risks to address first since they can’t handle everything simultaneously.

Conrad | This presents a unique opportunity for procurement leaders. While supply chain leaders have always managed supply risks, indirect procurement now faces significant risks too. Procurement can lead by bringing stakeholders together, elevating their role and visibility. It’s not about taking over cyber risk from the CISO – it’s about collaboration.

Zach | That’s a great reframing – seeing risk management as an opportunity rather than a burden. How do you operationalize this when procurement often handles the tactical work while other teams set policies?

Conrad | First, get out of denial. No other leaders are positioned to see all risk areas or represent both stakeholders and risk teams. Procurement can be the central voice, but shouldn’t try to control underlying policies. We need to balance risk evaluation with business operations.

Natasha | The LA fires demonstrate risk miscalculation. People warned about fire readiness, but preparation was inadequate. Despite warnings and resources, proper precautions weren’t taken, resulting in massive disruption and billions in damage.

Conrad |  Insurance companies saw this risk and started pulling out of high-risk areas – a clear warning sign that professionals who understand risk were making different decisions than government authorities.

Natasha | The key is making your voice heard. Procurement needs to build strong partnerships across functions. CPOs typically have small budgets but help manage billions in company spending. They must wear an enterprise hat rather than a functional one to demonstrate broader organizational care.

Zach | Let’s discuss specific risks: supply chain disruption, inflation, commodity volatility, and reputation risks. How should organizations handle these?

Natasha | Businesses must practically assess how geopolitical tensions, commodity pricing, climate change, and sustainability affect them. When CEOs consider tariff impacts, procurement should proactively think about alternatives – different suppliers, locations, specifications, or potential alliances.

Conrad | Looking at metrics, we see increasing tensions – political changes, extreme weather events, supply chain disruptions up 23%. Waiting to react isn’t acceptable. We need to predict and prepare.

Zach |  For inflation and commodity risks, companies need deep category knowledge and market understanding. Establish strong supplier relationships and stay informed about potential disruptions in areas like steel, aluminum, medical supplies, and rare earth minerals.

Natasha | Here’s a practical example of managing brand risk: In my previous role, we discovered 100 suppliers using 13 different versions of our logo on promotional items. By presenting this brand dilution issue to marketing, we gained their trust and later collaborated on strategic initiatives. The key was speaking their language rather than procurement-speak.

Conrad |  Risk management is ultimately supplier management – setting clear expectations and holding suppliers accountable to business standards. Understanding and enforcing policies helps preserve brand integrity.

Zach | To summarize: Partner with stakeholders, think enterprise-wide, reframe risk as opportunity, and focus on managing risks effectively even if it means addressing fewer risks initially. It’s a chance for procurement to add strategic value.

This transcript has been edited for clarity while maintaining all substantive content