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Operating a worldwide business at present requires effectively managing a network of third-party partners that supply product elements, run operations in overseas markets, operate call facilities, or act as outside consultants or agents.

The huge array of capabilities and specialized skill sets of a well-maintained third-party network makes operations easier for both the organization and its customers. But many organizations, from small companies to multi-nationwide corporations, can hardly ever afford the time and effort required in-house to manage these often advanced third-party relationships.

Because of this, the risk of unethical business practices, bribery and different business corruption probably will increase if inadequate due diligence is carried out on third-party partners. The ramifications of a scandal associated to a third-party partner can simply take down an organization, resulting in such risks as a damaged repute and brand devaluation, to regulatory violations, authorized proceedings and potential fines and jail terms for directors. The only way to totally protect the company’s assets, therefore, is thru a strong and viable third-party risk administration program.

Building a third-party risk administration program isn’t a passive process. It requires effort and time on a continuing foundation, as the risks related with third-party partnerships constantly evolve.

Consider the events of this past summer time, during which the legislators of three separate nations signed new compliance rules and standards into law. Without a doubt, if your organization’s third-party risk management program is unable to quickly adjust to these new rules (or isn’t designed to anticipate future legislative movements) your group is really at risk.

Cutting corners: not definitely worth the risk

Still, far too many organizations are willing to tempt fate by slicing corners on development and implementation of their third-party risk administration program. Definitely, building a robust risk management program requires a significant investment of time and resources (each internally and from the outside), however the penalties of not doing it proper may very well be dramatically severe.

One way organizations attempt to cut corners is by relying on outdated or stagnant instruments to monitor, detect and forestall risks. Virtually always, hiring outside trade professionals with proven track records of successful due diligence experience is necessary.

Relying too heavily on “desktop” due diligence is one other dangerous shortcut. Desktop due diligence is a crucial initial step of the investigative process, involving background checks, lien searches, regulatory filing investigations and environmental reports. And while it is a vital component of any effective due diligence program, it’s not practically sufficient to thoroughly evaluate a third-party.

Truly understanding a potential partner’s business requires a considerable amount of time spent face-to-face with the outside group’s leadership, operations administration and even current customers. This “boots on the ground” process will detect potential risks which are sometimes hidden from a distance, and undetectable via web-primarily based discovery tools.

The “boots on the ground” approach additionally helps to establish a relational dynamic required for ongoing negotiations and provides clear insight into of the fastest-growing points in third-party risk administration: bribery and labor management.

Bribery as a compliance situation

Anti-bribery and anti-corruption compliance is a fast-moving target. New anti-bribery laws and regulations are being decreed world wide at a relentless pace. Complicating matters further, many countries might have laws in place but lack the ability to adequately enforce them. When this is the case, the responsibility falls to your group’s due diligence program to make sure detection and protection.

High profile investigations in recent years have contributed to the speedy emergence of bribery and corruption as a societal issue. By no means before has such a contrast been drawn so dramatically on a worldwide stage between people who have interaction in bribery and those who undergo as a result. Any organization that finds itself mixed up in a scandal involving bribery has more than a authorized mess to contend with. It has a long battle to win back the trust of its shareholders, staff, clients and the public.

Conducting adequate due diligence surrounded by such varying factors is work that should be carried out in person. Gaining insight into a possible partner’s company culture requires a level of immersion with the group’s leadership, administration and staff. When it involves evaluating bribery risk, some warning signs can only be discovered on-site.

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