Ethical Risk


RISK IDENTIFIED

 

Source of Influencers

Internal
Poor screening or monitoring of ethical risks in the sourcing procedure. Are you paying a fair price? Ensure suppliers don't have to cut ethical corners to make business worthwhile.

External
Local customs, practices, and attitudes can potentially override policy - needs to be monitored, and enforced.



Organisational Consequences

Operational
Disaffected workforce may provide poor quality goods or services, or fail to hit stretch delivery targets.

Financial
Reduction in sales, unease in the investor community.

Reputational
Ongoing poor publicity for associating with/'condoning' poor ethical practice.



Sustainability Consequences

Social
There are ten principles held by the United Nations Global Compact (UNGC) under the headings of Human Rights, Labour, the Environment and Anti-Corruption - if your organisation isn't vigilant, it could easily find itself failing some, or all, of these.

Economic
If customer confidence is dented, this will affect your revenue stream - once disillusioned, it will take a substantial campaign to win back the 'hearts and minds' of your consumers.


Risk and Resilience

 

RECOMMENDATIONS

 

  • Encourage your key suppliers to participate in the CIPS Sustainability Index, which will help identify any potential risks in this area
  • Take the CIPS Ethics Test - it includes over two hours of E-learning resources and is designed to help procurement and supply chain professionals all over the world to demonstrate their absolute commitment to, and understanding of, acting ethically on behalf of their organisations.
  • With longer and more complex supply chains and the advent of digital media and the speed of communications, companies are under the spotlight more than ever before and under more intense scrutiny.
    Your organisation should have a Crisis Communications Plan that includes the following:
    • Contacts of key leadership team who will need to be informed and team members involved to disseminate messages
    • Do all key members of the Crisis Communications team have up-to-date plans and updated messages in an easily accessible and easy to read format?
    • Involve senior members from key departments to help develop levels of risk in each scenario from their perspective
    • Key messages in the event of a particular scenario and clear stages of when the messages go out e.g. basic message while crisis being investigated etc. plus tone of messages
    • Key stakeholders receiving the communication, both internal and external
    • Budget set aside to implement communications plan
    • Key spokespeople trained for media interviews and key crisis messages
    • A designated media centre away from place of business
    • Regular training for key spokespeople
    • Do you have measurements in place to monitor discussions about the crisis? And not just in the aftermath but for months after
    • Are you aware of whether any crises will impact on your suppliers or partners?
    • Is the plan updated regularly, i.e. every quarter?
    • You should have a process to scan social media networks for potential crises
    • Have you ever handled a PR crisis before? What were the key lessons from that crisis?
  • Using the guidance below, ensure your team are fully briefed on child and forced labour in the supply chain, health and safety, and environmental compliance, and build screening procedures into your sourcing and review process. When non-compliance is detected, you should do all you can to transform the situation and improve conditions.

 

FURTHER RESOURCES

 

CIPS Supply Chain Risk and Resillience Report

Supply Chain Risk and Resilience

Whilst there are numerous BSI and ISO standards developed for business continuity, risk management and organisational resilience there is no global benchmark that can be used to test and develop an organisation’s end-to-end supply chain resilience. The objective of this CIPS introduction along with the forthcoming good practice guidance and online tool is set to fill this gap. This will help procurement and supply management professionals support the survival of their organisations by identifying supply chain risks whilst protecting shareholders and the general public against the effects of disruption and malpractice.

Read the full report

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