General Studies · Procurement and Risk Management
A corporate procurement policy that strictly rewards employees based on achieving the lowest possible unit cost from suppliers is often scrutinized by risk analysts. The primary organizational risk in such an incentive structure arises because:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1performance-linked incentives are only applicable to executive management and not operational staff.
- 2it may incentivize short-term savings while neglecting the long-term risks associated with supplier quality and ethical compliance.✓
- 3procurement strategies are dictated entirely by government trade quotas regardless of cost.
- 4financial rewards have no influence on employee decision-making processes.
Correct answer
it may incentivize short-term savings while neglecting the long-term risks associated with supplier quality and ethical compliance.
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