You don’t have to peruse many headlines to find examples of third party vendor compliance infractions and the repercussions that follow. This litany of transgressions is bringing forth an increased focus on regulations, enforcement and a new definition of what is expected. Whether it is the Consumer Protection Act (Dodd-Frank Act), the Foreign Corrupt Practices Act or any number of existing or expected regulations, most companies can safely assume that there is increased focus and scrutiny on themselves and the third-party vendors they do business with.
With increased focus and investigation come increased penalties. The potential impact of running afoul of these regulations can range from embarrassing to potentially catastrophic. Failing to address third party compliance with a well thought out plan is akin to betting the house and rolling the dice…without the upside.
However, there is more to this than just the potential pitfalls. In addition to the fear of bad press and significant penalties, many companies are realizing that having solid third-party partners is the best way to reach the fastest growing and most dynamic markets. Therefore making efficient, timely and accurate management of these relationships is essential in maximizing growth and revenue opportunities. As the saying goes, “You snooze, you lose!”
A great point was made by Thomas R. Fox in his blog post in which he comments on the terrific presentation Flora Francis and Andrew Baird of GE Oil & Gas made recently at the 2014 SCCE Utility and Energy Conference in Houston. In his post, Mr. Fox makes this point: “Great leaders of any age have all realized at least this one idea – that you must have detailed and layered plans in place to mitigate severe risk.” History has given us many examples of those who have failed to heed this axiom. I guess you could also say they “let it ride” and lost.
In case you missed Part one, click here.