Third Party Due Diligence Companies - What is the Right Process
Building a Third-Party Due Diligence Program
How well are you monitoring your third-party vendors? It’s a critical aspect of any life sciences company. Initial screening is one thing, but you must continue to check these vendors. To protect your organization against Anti Bribery and Corruption Risk (ABAC), you should consider building a streamlined third-party due diligence program powered by technology.
With such a program in place, you can make the most informed decisions about who you do business with and have a clear understanding of any potential liability under anti-corruption statutes.
In this post, you’ll learn what a third-party due diligence program is and best practices around developing a robust program for vetting third parties. Additionally, we’ll look at how to use technology to create a healthy, transparent, and repeatable process.
What Is Third-Party Due Diligence?
A third-party due diligence program consists of primary or secondary external resources. The objective is to gather relevant information about the third parties’ risk and credibility. From the data and investigation, you should be able to document the vendor as risky or reputable.
The Foreign Corrupt Practices Act (FCPA) and compliance with it play a significant role in these assessments. That’s because the majority of FCPA violations involve a third party. Because of the tie between third parties and FCPA violations, life sciences companies have made this a compliance priority.
Is Your Due Diligence Program Missing the Mark?
It’s often difficult for organizations to make this process more standard. There are lots of factors involved, including the type of third party, regions, and various risk types. Further, there are lots of parties involved, both internally and externally. You may also be mired in manual processes or have severe limitations in a homegrown or off-the-shelf software product.
To execute due diligence well and at scale, you’ll want to consider these best practice strategies.
Best Practices for Third-Party Due Diligence Programs
How can you strengthen and streamline your third-party due diligence program? Let’s review some core best practices.
Keeping all your vendor and third-party information in one place makes it much easier to manage. Different departments across the life sciences organization work with various intermediaries. If that information isn’t visible to all, it can cause chaos, duplication of work, and inefficiencies. All critical details on vendors should reside in one place and be accessible to those that need it.
Create an Onboarding Program for Vendors
Business relationships are vital for your company’s success. When you decide to contract with a vendor, it can be helpful to have a formal onboarding process. This would include initial screening.
As you’ll be doing this at scale, you don’t want to be bogged down by manual work. Instead, use technology to automate data collection and screening. With the information you collect, you’ll want to know, at a minimum, the type of business, what permissions they’ll need to access sensitive data, their business continuity plan, and additional data related to assessing financial and legal factors.
Segment by Risk
Not all third parties will have the same level of risk. It’s important to categorize risk for each vendor during onboarding so you can plot out the correct course of action and due diligence to vet the company properly and reduce the need for rescreening
Establish a Process for Ongoing Monitoring
With segmented third parties, you can then define the rules by each group as to how you’ll continue to monitor them as long as they remain a vendor. This process is another part of a third-party due diligence program that you’ll want to integrate with technology to automate.
Use External Data in the Process
The process of verifying a third party shouldn’t depend solely on internal data. You should also leverage external data sources, including regulatory lists, media publications, politically exposed person (PEPs) databases, and other relevant resources. Once again, technology can be a facilitator, as manual checks would be too time consuming and labor intensive.
Define an Escalation Protocol
While the screening and careful selection of third parties is a great foundation, you’ll also need a framework for escalation when the risk is greater than the threshold set. Having a protocol will help prevent this from becoming a blocker to your program. Documenting escalation is highly recommended by regulators.
Using Technology in Your Third-Party Due Diligence Program
As noted in the best practices, you’ll want to employ a robust technology platform to build your program. Such an application delivers practical features and can ensure tighter controls around those third parties you engage.
Technology can be a true enabler for your organization. When comparing offerings, look at the features and how they conform to your needs. Also, be observant of the transparency and usability of the system.
Tools and Features to Seek
If you’re comparing options for third-party due diligence platforms, you’ll want to look for these features:
- Risk-based vendor assessment functionality
- Centralization of all ABAC data
- Questionnaires tailored to vendors with specific questions to help you create a risk profile
- Ability to engage in data privacy risk management
- End-to-end functionality: onboarding, screening, and monitoring in one system
- Third-party oversight documentation, reporting, and communications
- Customization of vendor-facing website and communications (i.e., onboarding emails)
- Screening and monitoring against accurate external databases.
- Vendor risk rating capabilities
- Reviewable Corruption Perception Index (CPI) scores.
Is Your Third-Party Due Diligence Program Protecting You?
The life sciences industry is rife with risk and regulatory compliance mandates. Due diligence of third parties is just one of the many complexities in the ecosystem. However, it doesn’t have to be such a burden to your team. By leveraging the right software, you can automate workflows and regiment the process. Simplifying it doesn’t mean increasing risk. Our due diligence experts created CompliConnect specifically for life sciences, and it boasts the world’s largest intelligence database.
Learn more about how it works by requesting a demo today.