02 January 2003 | David Arminas
Risk management will be a major focus for purchasers in the new year, according to a leading academic.
Dr Steve New, director of undergraduate programmes and lecturer in operations management at the Said Business School at Oxford University, says purchasers face uncertainty in 2003.
Writing in this issue of SM, he says: "Although no one can predict the future, there are vital issues that demand serious attention - the geopolitics of conflict and its impact on the global economy, and the crisis of organisational trust. The common thread is the management of risk."
A potential consequence of a war with Iraq is rising oil prices and its effect on logistics, so the response of the Opec (oil producing) countries is a key risk.
New warns that if firms were not already being held accountable for ethical sourcing, they would be sooner or later.
Last year's Enron and WorldCom accounting scandals in America were not an "exotic one-off" and similar news about accounting services will appear in 2003, he said.
To safeguard themselves from these risks, companies will have to invest heavily in people who understand these issues and prepare strategies to mitigate the consequences.
Ken James, CIPS's chief executive, said managing risk effectively, and not just its financial element, would be increasingly important in the year ahead.
"The purchaser will more than ever have to understand the business context in which their company's corporate strategy was developed," he told SM.
"Issues such as child labour can change so fast that purchasers must be able to have an input into adjusting corporate strategy to suit their market."