February 17, 2022
February 17, 2022
Contributor: Jordan Turner
Quickly onboard third parties and effectively keep watch for changes.
In short:
Amid ongoing supply chain pressures, most organizations are now working with more vendors, suppliers and distributors from new geographies. Thus, compliance can’t afford to restrict access to new suppliers. Progressive organizations are finding ways to streamline the upfront due diligence process and partner with the business to monitor third parties more effectively.
“Compliance leaders must move quickly to onboard third parties and effectively monitor for risks, but many of their traditional methods won’t cut it,” says Chris Audet, Senior Director of Research at Gartner. “Qualification processes emphasize exhaustive due diligence and post-onboarding monitoring is too slow at the outset and risky during the life of a contract.”
Download now: Stay Ahead of Growing Third-Party Risk
So, what should you do instead? These two tips will help you spend compliance resources on what matters most for protecting the business.
Lengthy, exhaustive questionnaires are difficult to examine and bury valuable insights. Consider cutting down the number of questions in your survey to identify the high-risk vendors that truly deserve additional review. Zero in on a list of critical risks by leveraging cross-functional sources to inform your company’s risk analysis. Think: company hotline reports, internal audit database and enterprise risk management (ERM) reports. And to keep your questionnaire up to date, meet with business partners to regularly review changes to the risk environment, operating environment and business model.
Learn more: Your Ultimate Guide to Supply Chain Management
Even with a streamlined due diligence process, risks can still crop up later. Develop a monitoring strategy for better visibility into the relationship with your external partners. To do this, create a playbook that grades each third party’s threat level to determine who gets more attention from the business and compliance. Share this playbook with others in the business who liaise with distributors — with specific instructions that differ depending on each distributor’s risk grade.
Ultimately, compliance’s traditional method of onboarding won’t cut it anymore — emphasizing exhaustive due diligence and less frequent monitoring afterward is too slow at the outset and risky during the life of a contract.
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Recommended resources for Gartner clients*:
How Compliance Can Help Amid Supply Chain Disruptions
3 Tactics From Bayer to Set Up Suppliers for Sustainability Success
*Note that some documents may not be available to all Gartner clients.