Managing third-party risk
Frequent compliance audits
Frequent compliance audit is a critical part of on-going monitoring
Having audit provisions in the performance contract is important for companies to assure audits are conducted in a timely manner. They require the third party to:
- Obey the relevant national and local laws and regulations
- Comply with the company's ethical policies
- Agree to regular audits or reviews
The provisions also demonstrate to the third party the importance of maintaining an ethical business, and full and transparent information of all business dealings on behalf of the company.
Audits and reviews should go deep enough to include the beneficial ownership of the third party and its reputation.
Lastly, there must be an incentive for compliance or a threat of disengagement for non-compliance.