Which of the following is a benefit of effective risk management in SRM?

Effective risk management in Supplier Relationship Management (SRM) leads to stronger supplier relationships because it emphasizes collaboration, transparency, and communication. When risks are identified and managed proactively, both the supplier and buyer can work together to address potential issues before they escalate. This partnership fosters trust and enables both parties to share valuable insights, which enhances mutual understanding and strengthens the relationship overall.

In contrast, the other options do not reflect the positive outcomes of effective risk management. Decreased regulatory requirements are not a direct benefit of risk management; rather, effective risk management often involves compliance with existing laws and regulations. Higher operational costs contradict the goal of risk management, which typically aims to reduce costs associated with disruptions or failures. Lastly, limited supplier engagement is undermined by effective risk management, as it aims to create open lines of communication and collaborative efforts between buyers and suppliers.