No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • Career Connection
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Download Whitepapers & Reports
    • Download eBooks
    • New: Living Your Best Compliance Life by Mary Shirley
    • New: Ethics and Compliance for Humans by Adam Balfour
    • 2021: Raise Your Game, Not Your Voice by Lentini-Walker & Tschida
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
    • On-Demand Webinars: Earn CEUs
  • Subscribe
  • Home
  • About
    • About CCI
    • Writing for CCI
    • Career Connection
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Download Whitepapers & Reports
    • Download eBooks
    • New: Living Your Best Compliance Life by Mary Shirley
    • New: Ethics and Compliance for Humans by Adam Balfour
    • 2021: Raise Your Game, Not Your Voice by Lentini-Walker & Tschida
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
    • On-Demand Webinars: Earn CEUs
  • Subscribe
No Result
View All Result
Corporate Compliance Insights
Home Risk

A Practical Approach to Supply Chain Risk

by Michael Volkov
December 16, 2015
in Risk

This article was republished with permission from Michael Volkov’s blog, Corruption, Crime & Compliance.

A Chief Compliance Officer can get so overwhelmed with risks that it is hard to keep their focus on priorities. Risks are everywhere and no compliance program can address every risk – the trick is keeping your eye on the ball and focusing on the significant risk.

There are lots of risks surrounding a company’s supply chain. Unfortunately, vendors, suppliers and their respective vendors and suppliers can drive you crazy when you start to calculate all the permutations. A supplier of a supplier of a supplier can create real risks for anyone in the chain.

In addressing this complex situation, a clear strategy has to be developed – predicated on defining the specific risks applicable to your supply chain.

As I have written on numerous occasions (and will not repeat here), in the absence of a representational interaction, a vendor or supplier cannot create liability for a company under the FCPA (and arguably the UK Bribery Act). This is an important point that limits the number of vendors and suppliers who can create FCPA liability since few of them act on a company’s behalf in a representational capacity.

The most significant risk for companies from their respective supply chain is reputational risks. For example, a company that deals with a vendor or supplier, who in turn relies on a supplier who uses child labor or violates human trafficking laws, can create real reputational risks. Such risks can have a devastating impact on a company’s trust factor and reputation for integrity, which in turn threatens the company’s financial performance and stock price.

Given this important principle, companies have to screen and carefully review their supply chain for reputational risks. Many companies subject to the conflict minerals rule have been through an excruciating exercise of defining their entire supply chain. It is not an easy process nor is it something that can be accomplished quickly.

One key factor in focusing on supply chain risk is to rank each vendor or supplier by the annual amount of money spent on each vendor or supplier. In this situation, most companies spend roughly 80 percent of their budget on their top 20 vendors and suppliers. Focusing risk management on those primary vendors and suppliers is an effective strategy for focusing risk profiles and priorities.

At some point, companies may find it costs more to collect information about companies in their supply chain than to mitigate the risks by representations and warranties from companies certifying as to standards they employ when contracting with vendors and suppliers.

Regulators are imposing more requirements on supply chain management. Government contractors have a myriad of requirements that they have to impose through flow down provisions on subcontractors.

In the end, companies are facing a straight-forward principle — no one wants to do business with an unethical, illegal or generally unpopular vendor or supplier. Apple suffered reputational harm with its reliance on Foxconn in China, Costco was hurt by its use of children who caught shrimp they resold and Nike suffered reputational damage from its use of child labor in making its sneakers.

To manage these risks, a CCO has to work closely with the head of procurement. Procurement professionals are very attuned to these risks because they do not want to be the person or office responsible for hiring the next vendor or supplier that results in reputational damage.


Previous Post

The 5 Worst Threats to Enterprise Cloud Security

Next Post

Security and Privacy: Head-on Collision or Blissful Matrimony?

Michael Volkov

Michael Volkov

Michael-Volkov-leclairryan Michael Volkov is the CEO of The Volkov Law Group LLC, where he provides compliance, internal investigation and white collar defense services.  He can be reached at mvolkov@volkovlaw.com. Michael has extensive experience representing clients on matters involving the Foreign Corrupt Practices Act, the UK Bribery Act, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and regulatory enforcement issues. Michael served for more than 17 years as a federal prosecutor in the U.S. Attorney’s Office in the District of Columbia; for five years as the Chief Crime and Terrorism Counsel for the Senate Judiciary Committee, and Chief Crime, Terrorism and Homeland Security Counsel for the Senate and House Judiciary Committees; and as a Trial Attorney in the Antitrust Division of the U.S. Department of Justice. Michael also maintains a well-known blog: Corruption Crime & Compliance, which is frequently cited by anti-corruption professionals and professionals in the compliance industry.

Related Posts

state flag of california

California Poised to Enact Landmark Climate Reporting Rules

by John Peiserich
September 25, 2023

While U.S. companies have nervously awaited to see how the SEC would address carbon accounting and reporting requirements, now pending...

fednow homepage displayed on mobile device

How Companies Can Get Ahead Using FedNow

by Nick Botha
September 25, 2023

The Federal Reserve’s instant payment system FedNow went live in late July, and dozens of banks and credit unions have...

department of justice building

Keeping Track of US Efforts to Stem Corruption at Home & Abroad

by Susana Sierra
September 25, 2023

Susana Sierra of BH Compliance explores why shifted priorities should cause all U.S. companies with Latin American connections to take...

labrador transparency awards graphic

PayPal, Verizon Listed Among Transparency Award Winners

by Corporate Compliance Insights
September 21, 2023

PayPal, Target and Verizon were among the S&P 250 companies honored for the efficacy of their corporate disclosure documents with...

Next Post
Security and Privacy: Head-on Collision or Blissful Matrimony?

Security and Privacy: Head-on Collision or Blissful Matrimony?

Available SQ
New call-to-action

Jump to a Topic

AML Anti-Bribery Anti-Corruption Artificial Intelligence (AI) Automation Banking Board of Directors Board Risk Oversight Business Continuity Planning California Consumer Privacy Act (CCPA) Communications Management Corporate Culture COVID-19 Cryptocurrency Culture of Ethics Cybercrime Cyber Risk Data Analytics Data Breach Data Governance DOJ Download Due Diligence Enterprise Risk Management (ERM) ESG FCPA Enforcement Actions Financial Crime Financial Crimes Enforcement Network (FinCEN) GDPR HIPAA Know Your Customer (KYC) Machine Learning Monitoring RegTech Reputation Risk Risk Assessment Sanctions SEC Social Media Risk Supply Chain Technology Third Party Risk Management Tone at the Top Training Whistleblowing
No Result
View All Result

Privacy Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2023 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • Career Connection
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Download Whitepapers & Reports
    • Download eBooks
    • New: Living Your Best Compliance Life by Mary Shirley
    • New: Ethics and Compliance for Humans by Adam Balfour
    • 2021: Raise Your Game, Not Your Voice by Lentini-Walker & Tschida
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
    • On-Demand Webinars: Earn CEUs
  • Subscribe

© 2023 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT