Companies that use metrics to measure process quality and can codify the work is indicative of a critical process whose operational risk in outsourcing is __________.

Question

BlackTom AI · Accepted Answer

The question presents a statement and asks about the operational risk in outsourcing a critical process that is measured with metrics and codified. Since there are no answer choices to compare, we focus on evaluating the claim.

First, consider the idea that using metrics to measure process quality implies standardization and objective oversight. When a process is quantified, performance can be tracked, variances identified, and corrective actions implemented consistently. This tends to reduce uncertainty and potential failures in the outsourced activity, which supports a lower operational risk profile compared to a process that is poorly defined or lacks performance metrics.

Second, codifying the work means there are documented procedures, controls, and workflows. Clear instructions and formalized governance help ensure that the external provider follows the expected standards, reducing the chance of miscommunication, drift, or ad hoc practices. This further contributes to lowering risk in an outsourcing arrangement, especially for a critical process where failures would have significant impact.

However, it is important to balance this with caveats: even well-measured and codified processes can carry residual risk due to dependency on the outsourcing partner, potential changes in requirements, or external disruptions. Metrics and codification reduce risk but do not eliminate it entirely.

In summary, the assertion that such a configuration indicates a lower operational risk in outsourcing is logically plausible because measurement and formalization tend to increase control, visibility, and consistency, all of which mitigate risk compared to unmanaged or poorly defined processes.

Companies that use metrics to measure process quality and can codify the work is indicative of a critical process whose operational risk in outsourcing is __________.

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