Third-party risks increase rapidly in India

Mumbai, 10 February, 2015

  • Share

Business risks are constantly on the rise and it is prudent for organizations to demystify, de-risk and undertake due diligence in this challenging environment. EY, a leading provider of assurance and advisory services, today revealed some key insights around due diligence to mitigate the vulnerabilities arising from third-party business relationships. An analysis of over 30,000 third-party due diligence checks which were undertaken in the last three years highlighted that almost 50% of cases which were reviewed had red flags. These include instances of regulatory non-compliance, involvement in litigations, environmental concerns, allegations of bribery and corruption and political affiliations.

To address organizational concerns and enhance compliance efforts, EY’s Fraud Investigation & Dispute Services practice has also launched a unique online tool, EY_ID to measure, maintain and monitor due diligence programs.

Arpinder Singh, Partner and National Leader, Fraud Investigation & Dispute Services, EY said, “Managing third-party relationships is a key focus area for organizations as it has a direct impact on the daily operations and overall profitability. With increased globalization, it is important to cautiously analyse this growing, complex network of associations and ensure conformity with global anti-bribery and anti-corruption regulations. The deployment of an intelligent and powerful third-party due diligence framework will minimize impending risks, augment productivity and foster confidence among all stakeholders.”

Dinesh Moudgil, Executive Director, Fraud Investigation & Dispute Services, EY said, “India is witnessing a technological revolution and driving companies to leverage it in all aspects of business. Predictably, we are now seeing this taking place in the analysis of third-party relationships where technology is used extensively in developing risk profiles and gathering intelligence. To mitigate business uncertainties, it is crucial to have a focused and risk based approach, while guarding against compliance fatigue.”

Key observations and trends:

  • EY’s Fraud Investigation & Dispute Services India practice has done over 30,000 third-party due diligence checks in the last three years
  • Over the last one year, the number of checks conducted in India grew by about 70%
  • Close analysis shows that almost half of the third parties reviewed (50%) had red flags
  • Sectors such as pharmaceutical, oil & gas, automobile, financial services, FMCG, retail and technology have a more focused approach toward due diligence
  • In India, common red flags seen include regulatory non-compliance, involvement in litigations, environmental concerns, bribery and corruption and political affiliations
  • Enforcement trends indicate that a number of companies have at times overlooked compliance protocols or used compliance framework only as a veil. Common pitfalls that may augment risks related to third parties include inadequacies in screening third parties or red flags being disregarded
  • Global regulators are increasingly collaborating across countries to investigate cases related to bribery and corruption. Such coordinated efforts are expected to continue going forward
  • Awareness around specific middlemen or facilitators are now more commonly known across countries
  • The use of Forensic data analytics (FDA) will be used extensively to identify crucial issues under review, efficiently detect and investigate instances of error, misuse, corruption, non-compliance and fraud, or to assist in a regulatory or litigation response
  • Technological advancements has enabled transformation of extremely high volumes of data into actionable insights

Today, entities with a global presence are under immense pressure to comply with regulations laid under the FCPA and The UK Bribery Act of 2010 (UKBA). With the number of reported cases around corruption, bribery and money laundering witnessing an uptick, there is a stronger need for organizations to liaise with vendors and third parties with judiciousness. EY_ID will enable companies manage these complexities, improve transparency and augment their anti-bribery and anti-corruption frameworks. The globally accessible tool and customizable offers secure end-to-end technology platform that allows real time tracking, monitoring and assessment of information for a robust ‘Know Your Third Party’ program. Large, global organizations across diverse sectors are expected to lead the adoption curve for due diligence programs due to the sheer size, scale and nature of operations.


Notes to Editors

About EY

EY is a global leader in its Assurance, Tax, Transaction and Advisory services. Our insights and the quality services we deliver help to build trust and confidence in capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In doing so, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization and may also denote one or more of the member firms of EY Global Limited, each of which is a separate legal entity. EY Global Limited, a UK company, which is limited by guarantees, does not provide services to clients. For more information on our organization, please visit

This news release has been issued by EYGM Limited, a member firm of the global EY organization. It also does not provide services to clients.

About EY’s Fraud Investigation & Dispute Services practice

Dealing with complex issues of fraud, regulatory compliance and business disputes can detract from efforts to succeed. Better management of fraud risk and compliance exposure is a critical business priority – no matter the industry sector. With more than 2,500 fraud investigation and dispute professionals around the world, we assemble the right multidisciplinary and culturally aligned team to work with you and your legal advisors. And we work to give you the benefit of our broad sector experience, our deep subject matter knowledge and the latest insights from our work worldwide.