By Chris Laws, Head of Product Development – Compliance & Supply at Dun & Bradstreet
The ability to trade globally and the strength of a business’s reputation is often an indication of overall success. Whether an organisation is a start-up or larger enterprise, successful growth is often tied to how effectively a business manages the relationships it has with its suppliers, customers and partners from around the world.
However, working with multiple partners across different countries also brings increased risk, and companies are faced with navigating a complex regulatory landscape. There is also increased focus on ethical practices, with businesses facing pressure from clients and partners, as well as regulatory bodies to “do the right thing.”It’s critical for businesses to have a full and transparent view of their operations to identify any potential risks and protect the company’s reputation.
Doing the Right Thing
There are now more victims of slavery than at any time in history, with the International Labor Organization (ILO) estimating more than 40 million people worldwide were impacted in 2016. With human trafficking the fastest-growing organised crime in the world, modern slavery increases supply chain risk for many organisations. In addition to the obvious ethical concerns, supply chain activities can expose a business to reputational damage and regulatory fines.The UK Modern Slavery Act has now been in place for more than a year, with companies over a certain size required to provide annual disclosure statements to confirm there is no modern slavery across their business or supply chain. Recent information from TISCreport indicates around half of businesses have not yet provided this information.
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The recent introduction of the UK’s new anti-money laundering watchdog also places an increased focus on compliance with the 2017 Money Laundering Regulations. Although the regulations are necessary to counter financial crime to stamp out illegal activity, they add complexity to an already challenging regulatory landscape. The growing need for more transparency increases the amount of due diligence required when onboarding new customers. This inevitably uses more time and resources and can become a pain point for customers. A Dun & Bradstreet study found 75% of compliance professionals believe delays in due diligence have a negative effect on customer experience.
The Value of Data
So how can businesses manage the increasing regulations they face? In an age where evasion techniques are growing in sophistication, intelligent data and an automated process can enhance efficiency and accuracy. Businesses need to ensure they have verified, relevant and up-to-date information on every aspect of their business operations. Having access to that data is key to meeting mandatory requirements and regulations concerning areas such as Beneficial Ownership.
Alongside internal data, procuring detailed third-party data can also help companies identify and manage risks, protect against reputational damage and ensure compliance with the plethora of regulations. Getting hold of the data is important, but how the data is managed and applied is just as crucial.
A company needs to be confident in the accuracy of any databeing used to validate decisions or monitor regulatory compliance. There are three main types of available data: a company’s own data, proprietary information from third-party data providers, and historical records. Using all three sources of data will form a comprehensive view of business operations and relationships. It’s also important to have data available in one, central location to all those who need it across an organisation.
In addition to supporting compliance, the right data can also unlock opportunities. Having access to certain information and insights can help businesses identify cost savings, such as inefficient or unprofitable supplier relationships. Having a detailed view of spend intelligence and insight into contracts and pricing can help accelerate business development and maximise value.
Delivering Data Dynamically
The UK Modern Slavery Act is one example of how companies are not keeping up with the increasing demands for regulatory reporting and compliance. Businesses need quick and effective access to insight on business relationships, especially in the midst of an ever-changing political, regulatory and economic environment. Being able to quickly pinpoint the right data at the right time is vital.
Technology and automation can significantly improve the effectiveness of due diligence. With so much data available, technology tools such as Artificial Intelligence (AI) and machine learning can play an important role in helping businesses find the information they need, quickly and efficiently. Technology can support more effective utilisation of time and resources, and help businesses be more agile by identifying the information via an automated process. We are already seeing companies implement Artificial Intelligence(AI) across different industries.
A Full and Transparent View
It is also important to review and monitor your existing suppliers and partners, in addition to completing due diligence on relationships with new third parties. There may be changes in ownership of your supplier’s suppliers that increase exposure or vulnerability to non-compliance. Having a full and transparent view of all business relationships is critical, and businesses need to draw on all three sources of business data: Internal data, proprietary information available, and historical data – to collate as much information as possible to ensure any decision made is an informed one.
In a dynamic and complex global market, businesses need to identify and mitigate potential risks before these risks impact their business and reputation. They cannot afford to wait for an issue to arise and using data to ensure compliance with regulation and to monitor business relationships is essential. Data allows businesses to protect themselves, spot the warning signs early and even identify opportunities for growth that were previously hidden.