The poor conditions some lorry drivers reportedly live and work in while on the road delivering goods for hundreds of companies including well known brands has been highlighted in the news.
Though these lorry drivers are employed by contractors — not the organization they are delivering goods for — it still has impact on the organization’s reputation and brand as they are the ultimate economic employer in the supply chain.
Additionally President Trump’s regulatory reform plans will be the focus for many U.S. firms, but how are they already managing the risks within their supply chains?
Even though the Trump administration’s early actions on the fiduciary rule and Dodd-Frank point to a moratorium on financial regulation, organizations must be extremely wary of regulatory complacency if they want to continue doing business at a global level.
Comprehensive knowledge of the regulatory landscape is a crucial element in effective supply chain and third party risk management, but it also involves developing and maintaining a thorough understanding of the plethora of potential risks inherent in business relationships
Watch the video — Risk can’t be eradicated but can be better managed
The consequences of failure in this area are significant, and can include enforcement action, often hefty fines, and — perhaps most devastating of all — lasting reputational damage.
A spotlight on the United States
So in light of all this, it’s somewhat surprising to find that in a recent survey commissioned by Thomson Reuters 78% of U.S. respondents said ‘Winning new business is a priority and as a consequence might breach regulations.’
The survey of professionals involved in global third party relationships or risk management sought to understand how U.S. organizations are really managing risk and to uncover any gaps in knowledge.
Risks such as bribery and corruption and modern slavery are brought into sharp focus when you consider that U.S. survey respondents reported that they have an average of 14,036 third party relationships globally in a typical year.
Benefits and risks
Survey respondents were aware that the risk landscape is changing.
Overall, 65% of those surveyed globally agreed that the current economic climate is encouraging organizations to take risks (relating to regulations) in order to win new business.
This view was even more widely held in the United States, where 68% of respondents were in agreement.
The main drivers for due diligence in the United States are compliance with regulations and protection from reputational damage.
However, the survey uncovered some quite alarming gaps in respondents’ knowledge relating to the potential risks they face, particularly around ultimate beneficial ownership (UBO).
The United States was, in fact, one of the worst performers in this area, along with Singapore, with only 7% reporting that they had sufficient UBO knowledge.
Lack of data
Global supply chains are complex and the most critical issues usually appear further from customer reach and influence.
Oversight of third parties is still one of the greatest challenges in managing compliance programs.
Watch video: Evolving trends in enhanced due diligence
However, our survey reveals that 62% of U.S. respondents only screen tier 1 suppliers, resulting in a lack of data on all business relationships for effective risk management.
This is why it’s critical that organizations have access to up-to-date and in-depth data such as Thomson Reuters World-Check risk intelligence.
Using more than 230+ research analysts to search for hard-to-reach information, World-Check provides structured profiles on individuals and entities to enable organizations to identify who they are really doing business with and understand how the various risks intersect.
For heightened risk individuals and entities, Thomson Reuters Enhanced Due Diligence, provides organizations with customizable detailed background reports, including information on adverse media, connections and relationships and UBO.
For the full results from the survey and to find out how organizations in the United States are really managing third party risk download the report.