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SOURCE NAVEX Global
Unchecked, Overseas Vendors And Suppliers Leave U.S. Firms Vulnerable To Corruption and Fraud
PORTLAND, Ore., Sept. 26, 2013 /PRNewswire/ -- NAVEX Global's™ 2013 "Third Party Risk in a Global Environment" survey has found that fewer than three in 10 U.S. companies carefully monitor their third party vendors, suppliers and agents to prevent corruption, fraud and other compliance risks.
The survey, released today, gathered insights from 300+ business professionals responsible for ethics and compliance activities. It explored how and whether they have implemented policies to mitigate the risks of doing business with third parties overseas. Survey respondents largely acknowledged the risk, but 71 percent admitted they do not track information on some or all of their third party relationships, exposing themselves to significant ethics and compliance risks.
Survey results come at a time when lawsuits related to misbehavior by third parties are on the upswing. The U.S. Department of Justice reported that in 2012 more than 90 percent of its anti-corruption actions involved a company's use of third parties. Case in point: GlaxoSmithKline's China operations are alleged to have paid large bribes to government officials, doctors, hospitals and at least 700 travel agencies in a case still under investigation.
"Ethics officers are focusing on day-to-day compliance, policy and training tactics, leaving little room to focus specifically on third party risk assessments and management," said Randy Stephens, vice president of advisory services with NAVEX Global. "Their bandwidth issues often necessitate a high-level review of some third party relationships rather than tackling the inherent complexities of tracking and monitoring all of their often thousands of third parties at an appropriate level truly impactful in protecting the business."
Among the survey's other findings:
Just 29 percent of U.S. companies monitor all their third party relationships.
Most respondents' (85 percent) list of key concerns included bribery and corruption.
Companies expect to increasingly rely on third parties to help them meet revenue and service goals.
Half of respondents don't conduct any third-party due diligence before contract negotiations start.
More than one third believe they don't have tools to reduce third party ethics and compliance risks.
"While organizations recognize the urgency behind monitoring third party activities, many are not empowered with the appropriate technology and resources to address the full third party risk profile," said Shanti Atkins, president and chief strategy officer of NAVEX Global. "The survey results highlight the need to remove barriers to monitoring third party risk, and to simplify and automate the ability to conduct diligence on all third party partners. Once aware of the specific aspects of their third party relationships, compliance officers can better understand their provider landscape and concentrate resources in the highest areas of risk."
Conducted in July of 2013, the NAVEX Global survey was completed by 303 professionals involved with ethics and compliance, including ethics and compliance officers, human resources, internal auditors, legal counsel and other senior executives.
The full survey report, "Third Party Risk in a Global Environment," is available at www.navexglobal.com.
About NAVEX Global
NAVEX Global helps protect your people, reputation and bottom line through a comprehensive suite of ethics and compliance software, content and services. The trusted global expert for more than 8,000 clients in 200+ countries, our solutions are informed by the largest ethics and compliance community in the world. More information can be found at www.navexglobal.com.
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