3PRM: When is it time to conduct third-party screening?Date:
21 Nov 2017
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 organization in terms of financial loss, liability, and damage to reputation.
Europe’s horsemeat scandal in 2013 is a strong case-in-point. 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.
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 3PRM due diligence 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 3PRM services will provide your business with a comprehensive approach toward managing all third-party management risks. Contact CRI Group today to learn more about how we can help you address all of your third party due diligence needs.