Classification of Risk in Public Procurement

Abstract

Risk is an inherent element of any activity. It also applies to the units of the public finance sector. The obligation imposed by the legislator to introduce management control mechanisms enforced the systematic approach on the risk management as well. This approach is very particular in relation to spending of public funds carried out in the public procurement process. Risk management is a process. Its essential element is the identification and classification of risk. The aim of this article is to propose a methodology for classifying risk in public procurement. The author described the public procurement market, pointing to the principles that shape it. He presented the concept, purpose, and stages of management control. On that basis, he outlined the concept of classification of risk in public procurement. According to the author, the knowledge about possible threats occurring in the public procurement procedure, the effects of their occurrence, and the impact on the objectives pursued by the individual is extremely important. Moreover, its appropriate systematization, ordering and classification can improve the risk management process. The proposed method of classification of risk in procurement may be flexibly adopted in various JSFPs, improving the effectiveness of risk management.