CHAPTER 6

Outsourcing and Risk Management

Nina Sodha

Introduction

In an environment where achieving competitive advantage solely through reducing costs or differentiation is not fully sustainable, companies are forced to strive for new business models that give them the strategic flexibility to adapt quickly without compromising their missions.

One such operating model is through outsourcing, which can relinquish certain risks, and hence rewards, to a third party, thereby allowing the company to focus on its core strategy.

Not all risks can be delegated, however; companies therefore need to identify these and investigate how they can be mitigated so that management is not distracted from its overall goals. Failure to do this will result in costly ...

Get Frontiers of Risk Management, Volume II now with the O’Reilly learning platform.

O’Reilly members experience live online training, plus books, videos, and digital content from nearly 200 publishers.