SAP Risk Management - Mitigate Risk by Monitoring Supplier Health: Product Demo

Learn how SAP Risk Management, combined with SAP Process Control, can help you monitor any aspect of your organization to mitigate risk. See how you can set up a risk driver, propose a control in SAP Risk Management, and accept and further define a control in the SAP Process Control application.

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  • http://global.sap.com/demos/mmov/demos/sap-risk-management-mitigate-risk-by-monitoring-supplier-health-demo-us.mp4
    • SAP Risk Management Mitigate risk by monitoring supplier health
    • In this demonstration, you’ll see how the SAP Risk Management application lets you identify a new risk driver and propose a control, approve and define a control in SAP Process Control, and return to SAP Risk Management to review the risk assessment with the new control in place
    • Enabling you to monitor and maintain the health of any aspect of your organization.
    • Identify a new risk driver and propose a control
    • Nancy DaSilva, a procurement manager at a steel manufacturer, needs to monitor the viability of suppliers to help ensure the success of her company.
    • She logs into the risk management application and chooses the “Risk Assessment” tab.
    • She selects the risk, Failure of Key Supplier, to review it and update it.
    • Nancy can select it from the list of the risks in her scope.
    • She displays the risk in a bow-tie view presenting the context of the risk in terms of organization, process, and activities, as well as drivers, impacts, and risk responses.
    • The visual representation helps Nancy explain the risk situation at workshops to colleagues who are not risk experts.
    • Nancy chooses a risk driver from the list, drags into the chart at the right, and enters a description for it.
    • The new risk driver is the possibility that a merger or acquisition between the primary and back-up supplier may occur ‒ and this could trigger a risk event.
    • Nancy notes that even before adding the new risk driver, the probability of a key supplier failing was 35%.
    • Because adding a new risk driver raises the likelihood of risk, Nancy changes the probability of a risk occurring to 45%.
    • This changes the risk level to high and puts it in the red zone.
    • Going back to the chart, Nancy can see three impacts that can be assessed.
    • She can choose to assess them by qualitative or qualitative factors, scoring, or three-point analysis.
    • This risk is now unacceptable due to its high level, so Nancy decides to review the existing risk responses.
    • She sees that there are two responses linked to the risk “Failure of Key Supplier,” but neither one covers the new driver she just identified.
    • One response requires maintaining emergency stock levels and the other requires a supplier contract.
    • To promote a direct response to the new risk driver, Nancy proposes a control to detect when the independence of key suppliers may be impaired.
    • Nancy can designate this as a key control, and she can propose the creation of an automated, detective control for greater efficiency and reliability.
    • Approve and define a control
    • Nicole Lee is the compliance officer at the steel producer who manages controls to mitigate procurement risks.
    • She receives an e-mail alert that a new item has been assigned to her, so she logs into the process control software and receives the proposed control from Nancy automatically.
    • The new item has been added to her “Work Inbox” and she can review the details of the proposal and its objective by clicking on it.
    • Nicole decides to add the proposed control to an existing automated control, “Monitor Suppliers’ Records.”
    • She reviews the details of the proposed control, including the risk the control is intended to mitigate.
    • There already is a control covering these issues, so she decides to link the control proposal to this record, so she can reuse it and avoid creating another similar control.
    • Nicole sets up the control to identify suppliers with identical bank accounts.
    • Presumably, two companies with shared bank accounts are not independent, creating a situation that contributes to the risk event.
    • She notes that this is a detective control, and flags a defined condition before the risk event occurs.
    • Results from this control show one issue already that is classified as a “significant deficiency.”
    • Once the automated control is run, it is apparent that there are a number of suppliers flagged as having shared bank accounts.
    • Nicole will investigate each item to determine if it is a valid deficiency.
    • If nonconforming suppliers are identified, corrective action can be taken.
    • Review risk assessment
    • Nancy reviews the automated control that is now added to the bow-tie graphic in Risk Management
    • She can drill down to display the results and potential deficiencies identified if necessary.
    • Satisfied that the control is effective in offsetting the new risk driver and that noncompliance is monitored, Nancy reduces the probability of the impact occurring to 35%, reducing the risk to medium
    • Before logging off, Nancy displays a heat map of the residual level of all the risks in her scope and can see that none are in the critical zone.
    • As you have seen, SAP Risk Management lets you identify a new risk driver and propose a control, and together with SAP Process Control, approve and define a control, and review risk assessment.
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