Technology has made doing business across great distances infinitely easier. However, the ease at which businesses can conduct business worldwide leaves them more vulnerable than ever to third party risks. Disruptions due to natural events, malicious attacks and infrastructure failures represent just a few of the dangers. Procurement professionals also have their hands full managing global compliance risks.
It is not enough to have just a compliance blueprint for your own organisation; measures should be put in place to ensure that all your third parties and partners maintain those standards too. Failure to comply with the growing number of global regulations—designed to address bribery, corruption, human trafficking and conflict minerals—can lead to serious consequences, regardless of who is responsible for the contravening act. In fact, according to an EY survey on third-party risk, 55 per cent of respondents believe that third parties constitute a bigger risk than internal staff. The survey found that of those surveyed;
What's this means for procurement professionals
Having robust due diligence and compliance process in place to help mitigate the exposure of doing business with these third parties is essential, especially for businesses with global supply chains. Regulators worldwide continue to crack down on the financial and corporate sectors, with an aim to eradicate money laundering, corruption, fraud, bribery and modern slavery. To help mitigate this regulatory and financial risk and protect your company reputation; a third party screening and ongoing monitoring part of your business toolkit. The costs of non-compliance can add up quickly. Beyond the obvious fines, companies also face ripple effect of expenses, loss of business opportunities, reputational damage and more.
EY's Paul Fontanot said, "Companies must take a proportionate and risk based approach towards entities that perform services on their behalf. Recent prosecutions by regulators demonstrate that companies can be liable for the actions of third parties acting on their behalf."
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