Control Risks VANTAGE: What is Third-Party Peace of Mind?

Start your journey of confidence: Discover Third-Party Peace of Mind with Control Risks VANTAGE

The third-party compliance landscape comes with a myriad of regulatory complexities and potential reputational concerns. In this article, we explore the relatively new concept of third-party peace of mind that is fast becoming a guiding beacon for companies navigating the intricacies of regulatory compliance.

Imagine a proactive shield offering protection from legal disputes, or a smart compass for navigating reputational risks. Picture a dependable roadmap and programme for understanding and managing global sanctions, anti-bribery, and corruption risks, ESG concerns and third-party due diligence. This is third-party peace of mind.

This article uncovers the layers of this safeguard, explores why companies seek it, how it works, and the unique proposition that sets Control Risks VANTAGE apart in the market. Welcome to the realm of third-party peace of mind, where compliance isn't just a checkbox – it's a comprehensive strategy for assurance and success in global business.

What is Third-Party Peace of Mind? 

The global regulatory and geopolitical landscape is not getting any easier. Sanctions, regulations, and supply chain challenges are growing more complex by the day. Compliance teams are having to achieve more with less but aren’t always armed with all the technological or geographical expertise necessary to address new and emerging risks.

Onboarding a third-party compliance vendor to assist the business with meeting global regulatory requirements, managing third-party risks, and protecting the business’s assets and reputation can help shoulder compliance burdens. However, such a partnership cannot be a one-and-done conversation or a one-and-done business transaction.

Compliance professionals today seek Third-party peace of mind like never before, whether driven by regulatory expectations, sanction risk, reputational drivers, or other factors. Thus, a long-term business partnership with an established and trusted third-party due diligence/ compliance vendor is critically important – a relationship that is built upon mutual trust, transparency, and an understanding of what it truly means to lower the business’s risk exposure and operate with confidence.

That conversation should and must be uniquely tailored to each company’s size, risk profile, industry, operational footprint, and other critical factors. Prudent compliance teams recognise that third-party compliance reports whether due diligence, screening or sanctions based, are merely products – not solutions to resolve today’s complex regulatory compliance challenges.

More meaningful than the reports themselves are the subject-matter expertise and risk mitigation measures that should rightly follow. The importance of this cannot be overstated.

Oftentimes, when compliance professionals receive a third-party due diligence or screening report, they have many critical follow-up questions for which they seek guidance:

Critically, how a company categorises the risk level of its third parties – high, medium, or low – is fundamental to determining the effectiveness of a compliance programme and is an area closely scrutinised by enforcement bodies. Oftentimes, when a company is prosecuted, it’s not that they don’t have a compliance programme in place, or were not engaging in third-party due diligence, but rather it’s that the compliance programme is no longer fit for purpose with the current times.

Gaps in compliance can be due to several factors, including out-of-date policies, procedures, or risk assessments; third-party due diligence reports that are poorly structured and/or analysed; or an overall lack of compliance expertise and the appropriate capabilities to act on the findings of that third-party due diligence report.

Regional third-party risks 

The questions raised above become especially prominent when operating in unfamiliar or high-risk regions of the world, especially where geopolitical tensions are high – whether that is the Middle East, Russia, China, Latin America, or elsewhere around the world.

Imagine receiving a due diligence report on individuals who operate in high-risk industries and high-risk countries that offers very limited information. This would prompt several pertinent questions: have we done the right checks to get the assurance we need that they are safe to work with? How can the business understand the wider context in which those individuals operate? Are there other factors to help the business gain the peace of mind that its third-party risk management programme is delivering the output it needs?

Geopolitical risks also impact compliance programmes in significant ways. Often, it’s difficult for the compliance team to stay on top of all these developments in a meaningful way. Thus, geopolitical risk assessments also are an important part of a robust compliance programme.

Another significant topic of relevance is environmental, social and governance (ESG) risks and principles. In this respect, compliance teams need a third-party due diligence vendor who has ESG subject-matter experts with knowledge and expertise on advising how to structure an ESG program that is truly fit for purpose, including providing insight on the impact of new regulations, such as the German Supply Chain Due Diligence Act (LkSG), the EU Corporate Sustainability Due Diligence Directive and many more.

How to audit and monitor third parties in high-risk regions of the world, particularly in countries where it’s difficult to conduct audits, is another common challenge. It requires not only having boots on the ground, but also having an established and trusted reputation in the region - someone who is familiar with local cultural nuances and can navigate this environment with ease.

Critical characteristics of a trusted vendor 

Putting all the above into perspective, a trusted and knowledgeable third-party due diligence vendor is one that will help the business not only by providing a third-party due diligence or screening report but also by providing actionable meaningful and insightful analysis credible actions.

Compliance teams need a third-party due diligence vendor that can provide confidence across the third-party lifecycle, one that can be an asset to the compliance programme, not a liability. That starts at the foundational level, partnering with a third-party compliance vendor who can help the business structure a compliance programme that is fit for purpose and proportionate to its unique risk profile.

The depth of engagement a compliance vendor a business is also critical. Some companies prefer having a vendor who can take over the management of the day to day of their compliance programme, engaging with third parties for them, conducting third-party questionnaires, for example.

Collectively, when seeking out a third-party due diligence vendor, there are certain critical characteristics to watch for, including: 

Partnering with a vendor that checks all these boxes and more will ultimately lead to the third-party peace of mind that compliance professionals seek and further ensure they remain on the right side of regulators.

As an integral part of Control Risks, VANTAGE combines leading technology with local expertise and resources to tackle your global and local compliance complexities.

Ready to add VANTAGE? Request a consultation.