The nature of business today is largely shaped by our connected world. Many organisations conduct business across international borders and/or overseas, and as part of various strategic and beneficial partnerships. In fact, the technology revolution and other factors that have removed barriers from business make it more essential than ever to have suppliers, vendors and other supporting companies helping to establish supply chains in various locations. And while they can be a great benefit to an organisation, these partnerships also represent an inherent security risk.
Vendors, suppliers and other third-party partners are entities largely outside of your control. While your organisation might have a high level of internal controls and stringent standards for ethical conduct, the entities that you partner with might not share those controls or values. And if something goes wrong, their failings can affect your organisation in terms of financial loss, liability, and damage to reputation.
Europe’s horse-meat scandal in 2013 or Quest Diagnostics data breach in 2019 are strong examples. Major organisations like Tesco were caught up in financial and PR disaster when it was found that some of their suppliers were using horse meat in products that were sold as 100 percent beef. Consumers were outraged, and many of the larger companies caught up in the scandal admitted that they had not performed proper due diligence or closely monitored their suppliers and their standards. And in the case of Diagnostics the exposed records of 11.9 million patients.
Why do organisations screen their employees but not the companies they work with? Failing to screen third party screening to the same level as permanent staff will increase your risks on many levels – from brand reputation to loss of money.
When is the right time to conduct due diligence?
While third-party risk management should be an ongoing process, there are certain times when it is absolutely crucial for any organisation. At CRI Group, we counsel our clients to always use third-party screening when doing any of the following:
- Performing pre-merger and acquisition research
- Conducting pre-IPO due diligence
- Engaging new clients
- Employing, contracting or retaining foreign business partners
- Implementing a consistent and audit-worthy AML and anti-corruption compliance program
Conducting 3PRM due diligence investigations at the right time has helped our clients avoid some major pitfalls, including the following:
- Merging with an international business embroiled in several behind-the-scenes legal battles
- Getting caught up in making procurement decisions involving the inappropriate influence of government officials who were slated to receive kickbacks
- Partnering with organisations that were potential credit risks, have claimed bankruptcy, have dissolved stated companies or were faced with debtor filings
- Awarding work to an overseas contractor with absolutely no prior experience
- Affiliating with a contracting company owned by a politician with significant influence on future awards
With a network of trained professionals positioned across five continents, CRI Group’s third-party risk management (3PRM™) services will provide your business with a comprehensive approach toward managing all third-party management risks. Contact us today and learn more about how we can help you address all of your third-party screening and due diligence needs – get a FREE QUOTE now!
CRI Group has safeguarded businesses from any risks, providing investigations (i.e. insurance fraud), employee background screening, investigative due diligence, business intelligence, third-party risk management, forensic accounting, compliance and other professional investigative research services. In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 19600:2014 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. Contact ABAC® for more on ISO Certification and tr