Which of the following scenarios exemplifies the risk of outsourcing too much to one provider?

The scenario that illustrates the risk of outsourcing too much to one provider is characterized by over-dependence on a single supplier leading to operational risks. When an organization relies heavily on one supplier for crucial services or products, it becomes vulnerable to various issues that may arise, such as supply chain disruptions, price changes, or poor performance from that sole provider. This over-reliance can jeopardize the organization's operational continuity, as any failure or inefficiency on the part of the supplier directly affects the company’s ability to deliver its own services or products. Furthermore, if the supplier encounters financial difficulties, natural disasters, or cybersecurity breaches, the impact can cascade throughout all processes that depend on that supplier, making the organization less resilient to shocks and more susceptible to risks associated with sudden changes.

In contrast, diversifying suppliers reduces this risk by creating a broader base from which the organization can source its needs. Focusing on core competencies is a strategy intended to enhance efficiency by outsourcing non-core activities, but it does not inherently suggest risk levels associated with a single supplier. Lastly, generating higher profits through limited sourcing may seem advantageous initially, but it can lead to similar vulnerabilities as over-dependence on a single supplier, emphasizing the importance of balancing cost-effectiveness with