Survey Finds that Nearly a Third of Companies Don’t Vet Vendors

A survey of more than 300 ethics and compliance professionals finds that despite concerns about compliance risks such as bribery and corruption, nearly a third of respondents don’t vet outside vendors prior to engaging with them.

Randy Stephens

Randy Stephens

The survey was conducted by NAVAX Global.

The report found that 32 percent of respondents don’t evaluate third parties before engaging with them.

This occurs despite some high-profile compliance failures in recent years stemming from third parties and serious concerns from survey respondents about third parties.

Respondents’ top three concerns about third parties included bribery and corruption (39 percent are concerned), fraud (23 percent are concerned) and conflicts of interest (19 percent are concerned).

“Though many organizations know which third party failures they should fear, they have not built sufficient programs and processes to identify and manage those risks.” said Randy Stephens, Vice President, Advisory Services, NAVEX Global, who wrote the report.

“That may indicate a disconnect between performance of individual programs and accountability for the pain of a third party failure. Whoever is managing third parties and third party risk should understand the economic risk and impact of third party compliance on the company.

“There are signs that organizations—often at the behest of their boards—are ramping up third party due diligence and risk management programs. However, many are struggling to create scalable, solid, defensible third party risk management programs.”

Stephens said that it’s somewhat encouraging that about two-thirds of companies are vetting third parties prior to working with them.

But he added that in many cases, the initial evaluation is not robust enough.

“Strong third party risk practices need to be supported by a culture of compliance, which is best established by the right tone from top and middle managers,” he said.


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