Ace the CPPO Challenge 2025 – Unlock Procurement Power and Shine!

The risk type that most commonly deals with issues arising from the terms of a contract is contractual risk. This type of risk directly relates to the agreements made between parties and the potential for those agreements to be interpreted differently or not upheld. It encompasses a wide range of concerns such as representation, warranties, obligations, and liabilities that are stipulated within the contract.

Contractual risks can arise when one party fails to deliver on their contractual obligations, the terms are ambiguous and lead to disputes, or when there’s a misunderstanding about the expectations set forth in the contract. These issues can significantly impact the outcomes of procurement processes and contractual performance.

Other options, while they pertain to risk in procurement, focus on different aspects. Sole sourcing refers to the risks associated with procuring goods or services from a single supplier, potentially leading to a lack of competition and potential price gouging or supply issues. Surety risks involve bonds and guarantees that ensure a contractor will complete a project, focusing more on financial backing than on the terms of the contract itself. Market-based risks typically involve fluctuations in the market that affect prices or availability of goods and services, rather than the content or compliance of the contracts executed.