Guest Post by Malcolm Peart (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

The Low Bid: Who’s Risk?

We live in a competitive environment and business generates the money that makes the world go round, or at least should do.  Money is the medium of exchange for goods and services and allows society as we know it and the global economy to function.

Those who have money engage those who want money to provide them with products or services and this is done through contracts.  Contracts are awarded at a price that the person who has the money (the Client) is prepared to pay and ‘the winner’ is typically the lowest compliant bid.

If compliance isn’t met then there is suffering somewhere. It can be the Client, the Bidder, the end user or all three and on Government projects it’s the taxpayer who, inevitably, pays. [Read more…]

Guest Post by Geary Sikich (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

Time matters most when decisions are irreversible

Transparent vulnerabilities are so obvious that they are easily overlooked; they are the ones we:

• see when they are pointed out;
• recognize when we are made aware of them;
• fail to acknowledge, leading to potentially significant consequences when the vulnerability is realized.

Risk and time are opposite sides of the same coin; for if there were no tomorrow, there would be no risk. Growing government intervention in the private sector therefore becomes a transparent vulnerability that we have not accounted for in our identification of vulnerabilities. Time transforms risk. The nature of risk is shaped by our time horizon. In order to achieve corporate goals and objectives time horizons are established few take into account government actions. [Read more…]