Buyers were warned to have contingency plans in place for the risks posed by “unknown unknowns”.
Stephen Easton, partner at A.T. Kearney, told the ProcureCon conference in Amsterdam unknown unknowns were by their nature difficult to predict but they included how laws are going to change in future, what regulations could be introduced, how global terms of trade might alter and natural disasters.
Known knowns included whether a supplier has filled in a compliance report and known unknowns included whether a supplier was complying with the law, Easton said.
“Tolerance of the impact from risk has really plummeted across our societies, especially Western society,” he said.
“You need right brain logic to think about unknown unknowns. Society is increasingly expecting that we know about things. We hate the term ‘act of God’ these days.
“Unknown unknowns are much more about having the right contingency plans. Having a prepared response process in place is crucial.
“Society’s expectations about what we do about risk is going up and the tolerance of risk is going down.”