Mitigating Compliance Risks in a Changing Environment: TOP 5 Recommendations

Mitigating Compliance Risks in a Changing Environment: TOP 5 Recommendations

Julia Karabkina, ICA, Associate Partner at COSA

Julia is responsible for the company’s quality aspects and client care. She conducts quality assurance within the company and develops professional skills upgrade programmes for our team members. She also contributes to the company’s quality standards development.

In view of the unprecedented health crisis caused by COVID-19 and its all-encompassing consequences, companies with global supply chains now face a much greater challenge than ever before: how can you effectively manage third parties in these times of disruption and enhance your compliance programmes to minimise business risks in the future?

1. Investigate your third-party ecosystem

Assessing the environment your third parties operate in and carrying out in-depth country and industry level research into local political, socio-economic, and regulatory changes will give you a background landscape for compliance risks assessment. Some unplanned anti-pandemic measures might even evolve into new legislation following unexpected restrictions or alternatively, cooperation opportunities.

2. Map supply chain risks

Classifying the jurisdictions of your counterparties into “high-risk” and “moderate-risk” zones will help reassess and diversify your third parties to minimise overreliance on risky jurisdictions. Spreading your supply chain network across lower-risk jurisdictions could help mitigate the impact of the global crisis.

3. Identify third parties that are crucial for business

Zeroing in third parties that are of the highest importance will help you to identify and prepare a short list of potentially crucial suppliers. Make sure that potential alternative third parties are selected through a standard compliance screening procedure. It will help your company to shorten the time necessary to onboard a new third party in case of emergency.

4. Conduct enhanced risk-based due diligence

Conduct high-scope due diligence on all the suppliers, intermediaries, and agents you have while taking into account new compliance risks to develop the most up-to-date compliance risk map. Illegal wildlife trade is closely linked to financial crime, corruption, modern slavery, human rights, etc. If any red flags arise during due diligence, consider changing your third party.

5. Keep tracking new compliance risks

Reviewing and adjusting your existing third-party risk assessment procedures and toolkits, such as supplementing your compliance screening databases with new priority classification and risk categories, will ensure your readiness to navigate challenges in a volatile environment.

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