Compliance Business is Booming. Why? Because 3rd Parties are Increasing Your Risk.
As other countries begin to increase their efforts on international bribery and corruption issues, certain industries and its investors are looking more closely at the countries they participate in. They are closely seeing and reevaluating the potential risk in doing business in certain parts of the world. Although every industry has issues with this, countries that are taking bribery and corruption issues more seriously are focusing on specific verticals that have a tendency to have larger occurrences of bribery and corruption. According to a Financial Times article written by Ben Bland, he says the compliance business is beginning to see a surge as more companies are taking a more serious look at their external risk and not just their internal compliance issues. China’s president, Xi Jinping, and his campaign to put an end to corruption in China, has companies looking very closely at its business dealing in the country and in the surrounding Asian markets.
“The anti-corruption campaign by China’s president Xi Jinping — and the bribery conviction and £300m fine handed down last year to GlaxoSmithKline, the pharmaceutical group — has prompted many foreign investors to reassess the risks of doing business in the world’s second-biggest economy. Elsewhere in Asia, multinationals are facing greater scrutiny amid anti-graft drives in Indonesia and Thailand, as well as from legal authorities in the US and the UK stepping up enforcement of their tough overseas corruption and anti-bribery laws.”
Up until now, many companies had been collecting large amounts of information and keeping it secure for its internal audit departments. Taking a very reactive approach has been costly for many companies; using a more proactive approach keeps up with the increase of legal standards and exposes possible risk that may cause issues for a company in the future.
Middle management has been tagged as the focal point of where bribery and corruption happen. Major focus on educating and training managers to identify and combat this is crucial for companies to avoid any possible penalties with bribery or corruption. Of course, as companies begin to engage in 3rd party transactions, they control they have over other 3rd party management teams becomes extremely difficult and extremely risky. Having a set of systems that help manages and over sees 3rd parties is the foundations of becoming proactive. This allows for parent companies to visually see what activity is going on with their 3rd party vendors and make critical business decisions in the event that something were to arise in the area of bribery and/or corruption. To learn more about these systems and how different levels of 3rd party monitoring can increase your visibility within your 3rd parties and supply chain, click here.
