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Financial services, energy, construction, pharmaceutical and biomedicine—these highly-regulated industries must undertake robust due diligence and risk monitoring. Did you just breathe a sigh of relief because the company you represent doesn’t fall into the highly-regulated bucket? Think again. Globalization means that companies of all sizes and across a wide range of industries need to develop the appropriate due diligence procedures to mitigate strategic, financial, reputational—and, yes, even regulatory—risk.
Globalization isn’t new, of course. It has, however, increased significantly in recent decades. The accelerated pace of globalization boils down to several factors.
As a result of these and other advances, your company does not have to be a multinational giant to feel the impact of globalization. As we saw during the sub-prime mortgage crisis in the U.S., for example, the global nature of the financial system meant that major banks in other countries felt the impact. You need to stay alert to potential risk now, more than ever, because it can come from places you might not expect.
A highly-regulated industry like banking conducts due diligence as a result of ‘Know Your Customer’ (KYC) regulations designed to detect and protect against money laundering. But in today’s fluid, global business landscape, your customers represent only a fraction of the entities and individuals you need to know. And anti-money laundering (AML) compliance is just the tip of the iceberg too. Let’s take a look at why globalization has increased different types of risk you face.
So, you aren’t in a highly-regulated industry. But as you can see from above, regulatory risk appears in each of the areas above—and it isn’t limited to only certain companies. If you want to grow your business, you must navigate a complex tangle of international compliance requirements covering bribery, corruption, modern slavery and more. And as the examples above show, simple third-party screening falls short in providing the type of supply chain transparency needed in a global business landscape. Is your due diligence process ready?