Global supply chain visibility is vital to business sustainability. Even during times of disruption, businesses are expected to uniformly uphold high levels of ethical standards across their entire global supply chain.
In the current environment, with some supply chains ramping up to meet unexpected critical demand and many others winding down amid difficult working conditions, the situation becomes ripe for bribery, corruption and risk exposure. Your organization can’t relax due diligence procedures during this period, corners cannot be cut—enforcement actions won’t reduce just because economies are slowing.
For supply chains that are negatively affected by recent events, now is a good time to get ready for the eventual revved-up consumer demand that will hopefully follow a slackened period. That means that enterprises should use their unplanned downtime to get ready, refresh due diligence, review their supplier relationships and reassess the supply chain to cope with a temporarily contracted audience. The green shoots of recovery will inevitably begin to sprout, and having due diligence and onboarding processes and policies ready to adapt to the change will help companies react better.
Conversely, for those enterprises who have had to quickly adjust supplies to meet sudden high demand, the onus is on them to continue to rigorously monitor for the potential of criminal and gray-market activity. Taking due diligence short cuts, or accepting lower standards, to meet an urgent need might lead to unpleasant consequences if things go wrong: high fines and penalties, a dismantling of carefully constructed brand reputation and an eventual loss of shareholder value.
“Black swan” events create multiple opportunities to introduce supply chain risk
Less than a third of supply chain executives looked to address Anti-Bribery and Corruption (ABC) issues with their suppliers, according to a survey of corporations representing major industrial companies.1
When chaotic events are unexpectedly added, supply chain integrity becomes further tested. Some companies with an urgent need to ramp up critical consumer supplies may overlook stringent processes, leaving the door open to risk. Other enterprises may be operating with a minimal staff and don’t have the manpower that is needed to make certain they are adhering to the growing, and evolving number of international compliance regulations.
Among the foundational questions that enterprises must ask themselves, in these times, and in all times, are:
- What geopolitical risks are inherent to the country of product origin?
- Do we fully know the reputational and reliability risks our suppliers represent?
- What steps are those suppliers taking to manage foundational risks on our behalf?
- Can we trust that our third party shares our commitment to compliance?
Reining in risk exposure is a crucial element of really knowing who plays a role in your global supply chain. To protect against financial and legal penalties, companies must manage and mitigate their risk across the supply chain and remain compliant with various ABC laws and regulations.
Not doing so could prove costly. In 2019, the largest FCPA regulatory fine to date was levied against Ericsson, the Swedish telecom giant, who agreed to settle a bribery allegation case spanning Asia and the Mideast and was subsequently fined $1 billion for widespread corruption.2 Similarly, Russia’s biggest mobile phone company, MTS, was forced to pay $850 million to resolve FCPA anti-bribery offenses.3 Government enforcement agencies are continuing to aggressively investigate risk breaches, and work more effectively across borders to bring actions against companies.
Data-driven technology automates the compliance process
Traditionally, enterprises have addressed risk compliance by underspending—using minimal staff and single-layer solutions—or overspending with expensive labor and time intensive due diligence procedures. Fortunately, there is a third way to complete due diligence and meet the increasingly stringent regulatory requirements. New and advanced supply chain technologies are already here to help supply chain managers anticipate and meet future challenges—whether it is other “black swan” events or more common occurrences like sudden demand spikes or supplier bankruptcy.
As businesses face inevitably stronger levels of scrutiny, the imperative for avoiding an enforcement has never been more imperative. Intelligent solutions can help enterprises proactively strengthen Anti-Bribery and Corruption (ABC) compliance, automate due diligence workflows and stay focused on core business objectives.
Of course, due diligence is only as effective as the data sources that are utilized to perform it. Blending leading technologies with human intelligence delivers robust, yet structured global risk intelligence. Current, consistent and consolidated risk information are the three keys to improving global supply chain visibility, increasing due diligence process efficiency, automating and accelerating critical ABC workflows.
Leveraging these technologies can help you minimize your risk of government investigations and costly penalties. Furthermore, it can help your company balance supply chain due diligence and compliance efforts with effective and more sustainable business operations so you can move forward with confidence.
For more information, call 1-800-953-2877 or visit risk.lexisnexis.com/ABC