Third Party Risk Management

Summary
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The use of third parties has steadily increased over the years. This increase has been driven in part by economic conditions, productivity, globalization, specialization and sometimes a possible misunderstanding that using third parties can eliminate a company’s liability. However, engaging third parties does not come without risks and accountability.  

Increasingly, governments and regulators have held the engaging companies liable for the actions of third parties who violated the law. For example, many enforcement actions for violations of the FCPA directly resulted from the misconduct of third parties. Companies have also seen their reputations damaged by the compliance failures of the third parties they had engaged.

A company that uses or intends to use third parties should have a policy and process to ensure that third parties understand and adhere to the company’s ethical and compliance standards. Next, third parties should be vetted using reasonable due diligence. Any red flags that appear in this due diligence must be reasonably and consistently addressed. Accountability does not end here. Companies should then monitor over time the third parties they engage, in order to ensure continued compliance.

If your company does not have a third party policy and process now, you should correct this. Do something, even if you have to start small and scale the process. Doing nothing is not an acceptable solution.

Key Resources

For your convenience, ACC has compiled the following key resources to assist you in your compliance efforts.

For more try searching ACC's online library for "Third-Party Risk Management"

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