What risk does outsourcing create for ABC?

• A. Outsourcing creates over-reliance on third-party contractors.
• B. It eliminates risk.
• C. It ensures complete supply chain independence.
• D. It guarantees improved quality control.

Answer: (A)

Outsourcing introduces a dependency on external providers. When ABC moves work to third-party contractors, its ability to run smoothly depends on those suppliers’ performance, reliability, and continuity. If the supplier faces delays, quality problems, cost changes, or even insolvency, ABC can suffer disruptions, higher costs, or loss of control over how the work is done. That reliance on an outside party is the primary risk created by outsourcing. It’s not that outsourcing eliminates risk, guarantees complete supply chain independence, or automatically improves quality control; in fact these outcomes aren’t assured and can be undermined if the supplier underperforms or changes conditions.