COVID-19 was damaging for many businesses and its aftereffects continue to ripple through the market.
The pandemic and last year’s supply chain crisis brought to light the importance of vendor risk management and the power of technology in reducing risk.
As various supply chain points were affected, many organisations were under severe day-to-day pressure to keep operations running despite single points of failure. During this time many organisations were taking shortcuts with KYC and due diligence checks.
The reality is that as they struggled to rebuild fractured supply chains and keep customer trust in a competitive market, leaders made due diligence choices which inevitably exposed them to more risk.
This fostered an environment where criminals and fraudsters thrived and found new ways to target consumers and companies. Despite this threat, many professionals admitted that they were not fully monitoring third parties for ongoing risks.
Due diligence goes beyond regulatory and financial repercussions. By committing to a robust due diligence program, and building an ethical supply chain, organisation can help put a stop to corruption, modern slavery, environmental crime and wildlife trafficking.
The environmental aspect of ESG has historically not been a priority; however more and more companies highlight that tackling green crime is becoming critical – including aspects of illegal fishing, illegal logging, illegal wildlife trade and waste dumping.
Put simply, COVID-19 accentuated ESG issues’ relevance to businesses’ operations and decision-making. This is a trend that will likely continue, as regulations such as the EU Directive on Mandatory Environmental and Human Rights Due Diligence and Germany’s upcoming Corporate Due Diligence Act are imposing significant enforcement penalties and ask for continuous due diligence of third-party relationships.
2020 and the past few months put into perspective how technology can help fight financial crime and strengthen supply chains. Research found that those organisations who were already utilising new technologies to fight risks associated with financial crime are both more aware of it and more likely to take action.
The use of technology also fosters collaboration. Innovative digital technologies not only help identify financial crime but also allow organisations to better collaborate with law enforcement agencies and help halt criminal operations.
Third party risks have increased immensely over the past year and a half, but are we all aware of the true cost of these crimes on society and the environment?
It is now more important than ever to be aware of these hidden risks and how to overcome them through the power of technology and trusted data.