Companies often fail to understand their own policies designed to vet suppliers against bribery and corruption and such policies are applied inconsistently, according to a report.
A survey by Dow Jones Risk & Compliance into the third-party risk management practices of UK companies found 31% of third parties were considered “high risk”.
Half (50%) of those canvassed said the time required to vet suppliers resulted in corners being cut to avoid slowing down the pace of business.
Researchers surveyed 250 UK-based procurement professionals from five sectors: engineering and construction, oil and gas, IT and technology, media and telecoms, and manufacturing.
Respondents said that a third of all new supplier onboarding undertaken in the last 12 months was “likely to have been executed incorrectly”.
And more than half of procurement professionals could not say they were confident that existing suppliers have been vetted properly, while 41% believed senior-level relationships influenced the level of supplier vetting.
Only 45% of respondents said they had regular training certification programmes to ensure the code of conduct for third-party risk management was fully understood and thoroughly applied.
The report said rapid change was needed if UK companies were to avoid disruption, financial penalties and reputational damage.
This was especially true because increased scrutiny from regulators and stronger enforcement from prosecutors such as the Serious Fraud Office was likely, it said.
The research revealed that procurement professionals expect third-party relationships to double over the next three years.
Around two-fifths of respondents admitted their approach needed an overhaul, but most of those surveyed did not expect to see budgets rise to meet the extra work.
In fact half of those surveyed expected budgets for third-party vendor management to stay the same, while a quarter forecast cuts to budgets.
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