The following is an excerpt from an article written by John Walters fro GovPro Media:
We manage risk every day without thinking about it. We watch the morning weather and pick out clothing. We decide which route to take to work. We decide to refinance our home. We choose a babysitter on Saturday night. In each case, we are managing risk by balancing price with both expected and unexpected results. We make some purchases without thinking, but for others we agonize and are cautious at each step.
The Random House Unabridged Dictionary defines risk as, “The exposure to the chance of injury or loss; a hazard or dangerous chance.” In public procurement, the focus is often not on risk but keenly focused on price; the general public expects, and conventional wisdom dictates, that we find the lowest price. But we should remember the old joke in which the astronaut said: “Just think, we are sitting on a rocket with a million moving parts all provided by the lowest bidder.” What other factors beyond price come into play? More to the point: How does risk play into public procurement, and how do we begin formally incorporating risk management into the process?
