Risk Management Policy
Context
All projects embody a degree of risk that can never be completely eliminated. However, risks can be identified and controlled. The management of risks requires containment strategies to mitigate risk and contingency planning to respond to risks that may emerge.
Risk management in procurement should be part of an overall procurement management philosophy.
Key Requirement
1. Preparation of a Risk Management Plan for Major Purchases
High value purchases and projects of lesser value but of a complex nature require the preparation of a project risk management plan. The risk management plan must consider risks at all stages of the procurement cycle.
The risk management plan is to address the following factors:
- Risk Identification: identifying risks associated with the project.
- (What incident could occur and what or why the incident could occur).
- Risk Assessment: the likelihood and magnitude of the risks.
- (Develop a likelihood and consequence matrix).
- Risk Mitigation: strategies for pre-empting and treating the occurrence of a risk.
- (Identify options for reducing the likelihood of the risk occurring and treatment strategies if a risk eventuates).
- Risk Allocation: detailing responsibility for managing a risk.
- (Specifying the degree of responsibility for avoiding the occurrence of the risk and the treatment of the risk should the risk eventuate).
- Monitoring and Control: identifying new risks as they emerge.
Other Requirements
Detailing Contractual Provisions for Risk Mitigation, Defaults and Remedies
- Insurance provisions (professional indemnity, third party legal liability, all risks and public and product liability insurance) are to reflect the assessment of risk arising from the management plan.
- Contracts should clearly define what constitutes a default and detail those processes for managing a breach of contract.
Related VGPB Policy and DTF Guidelines
Strategic Procurement Planning (SPP) Policy
Contract Management Policy
Insurance Provisions and Liability Capping for Purchases of Goods and Services Guidelines (566 KB DOC)
Related DTF Templates and Forms
Estimating Maximum Loss for Product Liability Template (44 KB DOC)
Links to relevant Policy websites
Nil
Version Control Information
 Version Number | 2 |
Release Date | December 2002 |
Further Information | Strategy and Policy, Government Services Division, Department of Treasury and Finance |
Phone | (+613) 868 32944 |
| vgpb@dtf.vic.gov.au |
