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3 tips for an effective third-party compliance program

On Behalf of | Mar 17, 2023 | Investigations & Regulatory Compliance

In today’s globalized world, third-party compliance is a crucial aspect of business operations. You do not want to expose your business to regulatory and reputational risks due to the conduct of external vendors, contractors and suppliers.

Therefore, it is advisable to have an effective third-party compliance program to help protect your business interests and avoid legal or financial issues. Below are some helpful tips that can help you achieve this.

1. Identify and understand the potential risks

The first step to implementing a third-party compliance program is identifying the potential risks of working with third-party vendors. These risks may include corruption, fraud, human rights violations, and data privacy breaches. Conduct a risk assessment to identify these risks, analyze them and rank them in order of priority.

2. Conduct due diligence

After identifying the risks, conduct due diligence on potential third-party vendors to ensure they meet your compliance requirements. Due diligence should include verifying the vendor’s legal and regulatory compliance, financial stability and reputation.

Remember to include specific compliance requirements in any contracts with third parties. Align all contracts with your organization’s compliance policies and include clauses that require the vendor or third party to comply with relevant laws, regulations and industry standards.

3. Ongoing monitoring is crucial

Maintaining an effective compliance program requires constant monitoring. Undertake regular audits, inspections and performance reviews to weed out any loose ends.

Most importantly, provide regular training to your employees, especially those who deal with third parties, to ensure everyone understands and upholds compliance policies and procedures.

Do not take any chances

Knowing who you are doing business with is not enough. As an organization, it helps to have a robust third-party compliance program that will help mitigate the associated risks and give you a competitive advantage.