THIRD PARTY COMPLIANCE IN INDIA Red Flags, Cultural Hurdles & - - PowerPoint PPT Presentation

Dun & Bradstreet presents: Red Flags, Cultural Hurdles & Emerging Best Practices Manish Sinha Managing Director – India Satyajit Nandi Abhay Bhat

Senior Manager, Third Party Compliance Head, Legal & Compliance

Date: November 14, 2017 Venue: St. Regis

THIRD PARTY COMPLIANCE IN INDIA

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Compliance as an Essential Element of an Organization’s Culture

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.”

WARREN B UFFET

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Compliance as an Essential Element of an Organization’s Culture

The Third Party Landscape Continues to Grow

Source: Fraud and Corruption – Driving Away Talent – Asia Pacific Fraud Survey, 2015 - EY Source: NAVEX Global Survey, 2016

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Compliance as an Essential Element of an Organization’s Culture D&B uses an Engagement Based Approach in which each individual engagement is risk-assessed and screened. Broad scope to include all third-parties such as agents, distributors, JV Partners etc. D&B Tiers the Third-Parties across Engagement Risk and Market Risk and then applies a risk-based screening methodology across the value chain The Third Party Compliance Program is implemented regionally with Central Direction, Control and Oversight and local, on-ground knowledge and market expertise D&B applies a Cross-Functional Risk Assessment and Mitigation to the Third-Parties across other areas including but not limited to the business, IT Security, Data Privacy etc. D&B proactively audits some of the high-risk third-parties D&B also has Real-Time, Ongoing alert and monitoring of the on boarded Third-Parties D&B uses our own ownership data as well as our own internal platforms such Compliance Check, On-Board in partnership with appropriate External Partners to reinforce and supplement the program D&B trains the Third-Parties using on- line, training courses on D&B’s Partner Code of Conduct; which has been specifically designed for Third- Parties D&B utilizes Technology across the Value Chain to deliver efficiency as well as scalability across markets;

Third Party Compliance

Engagement Based Approach

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Leverage Technology

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Risk Tiering and Screening

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Locally Global

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Cross- Functional View

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Training

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Internal and External Skill and Expertise 07 Proactive Audit and Ongoing Monitoring

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D&B’s Third Party Compliance Program

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Compliance as an Essential Element of an Organization’s Culture

D&B’s Third Party Compliance Program – Tools & Sources

Third d Party ty Entity and Principal / Shareh reholde der r Inform rmati tion

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Ultimate te Benef efici cial Owners ershi hip – Upto 4 level els; s; includi ding g Domes esti tic and Globa bal Ultimate te Entity and Shareh reholde ders rs Adverse rse Media, , Sanctions s Lists, s, Litiga gati tion Searche rches, s, Human Traffick cking g Index, Compliance ce Verifica cati tions and Backgrou ground d Check ecks s .On On-Site te Audits s and Verificati tions On On-goi going, g, Real-Time e Monitori ring g and Alert rt Reporti rting

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Master Data Beneficial Ownership Compliance Check On-Site Audits and Verification

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Compliance as an Essential Element of an Organization’s Culture

What are some of the largest risks that we have seen in India Supply Chain?

LEGAL & COMPLIANCE

Risk that the customer is not in compliance with laws, ethical standards, or its own policies/standards/ procedures because a third party does not have adequate compliance management processes/controls

• ver its products/services/systems

REPUTATIONAL

Risk of brand damage to the customer due to a third party’s inability to meet the requirements

OPERATIONAL DELIVERY

Risk of a financial loss to the customer and/or an adverse impact to the customer’s product/service delivery due to inadequacies in a third party’s internal processes/people/systems and/or other third-party issues

FINANCIAL VIABILITY RISK

Risk of disruption to the customer’s

• perations due to a third party no longer

being a going concern

INFORMATION SECURITY RISK

Risk of inappropriate disclosure, corruption, or destruction of the customer’s information due to a third party’s failure to provide appropriate security and privacy controls

CONTRACTUAL RISK

Risk of the third-party’s inability to meet contractual terms or and/or a risk of incomplete or inadequate contractual provisions

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Compliance as an Essential Element of an Organization’s Culture

Red Flags –What are some of the Red Flags that D&B has seen in India across the Third-Party Landscape?

• Third Parties using family members as front-person(s) to avoid taxation
• Use of intermediaries to liaise and/or coordinate with Government Official for issuance of licenses and/or permits
• Conflict of Interest with D&B Team-Members
• Hesitation to comply with on-boarding process
• Demands cash payment, or other special arrangement, or receives or requests unusual bonuses or commissions
• Does not disclose the use of Sub-Contractors (4th and 5th Party Compliance)
• Politically Exposed Person (PEP) at the Third Party

Emerging Best Practices: What is Coming Next?

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Compliance as an Essential Element of an Organization’s Culture

Emerging Best Practices Across Third Party Compliance

• Convergence of Procurement and Third Party Compliance
• Rapid Move toward End-To-End Automation Using Software and Workflow Solutions to enable development of scalable, risk-based program with

the resources being focussed on risk mitigation rather than manual, transactional activities (Competitive Advantage – Best-In-Class Programs)

• Best in Class programs will need to become more data-driven with metrics to measure impact on company culture and growth and to provide

ROI to the organizational leadership

• Expansion of the Third-Party definition beyond traditional suppliers to include Partners, Distributors, Alliances, Joint Venture Partners etc as well

as scope expansion of the Third-Party Compliance Program to review deeper down within supply chains to include 4th and 5th parties more effectively and relying more on data to drive due diligence and risk mitigation

• Implementation of real-time, continuous monitoring to enable move away from a static, one-time approval based process
• Cross-Functional Third-Party Process to ensure implementation of a multi-faceted approach to Risk Assessment and Mitigation (Compliance,

Legal, Commercial, Privacy, Information Security, Data Governance etc.)

Thank You.