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The Biggest Supply Chain Compliance Risks To Conquer For 2023

Findings explains the biggest compliance risks in your supply chain in 2023

Now is the time for businesses to overhaul their supply chain compliance strategy. As they head into 2023, organizations should take stock of which supply chain compliance challenges matter most today, as well as which types of practices can help them conquer those challenges.


Let’s walk through the biggest risks that we’re noticing heading into 2023 and what businesses can do about them.

Core Supply Chain Compliance Risks For 2023

There are four overarching types of risks that are likely to shape supply chain compliance challenges for most businesses in the new year.

  1. The Need For Real-Time Visibility

Supply chain visibility, such as through a vulnerability disclosure policy, has always been an important component of supply chain compliance. 


Today, however, basic visibility isn’t enough. Businesses need real-time visibility so that they can detect and react to supply chain risks as they appear. As Blume Global notes, “in a volatile market, real-time information is essential…to maneuver through supply chain disruptions.”


To achieve real-time visibility, businesses need automated tools that can detect and evaluate supply chain risks in real time. Running periodic audits or relying on occasional reports for visibility is not enough.

  1. Supply-Wide Communication

Knowing where supply chain risks lie is only the first step toward supply chain compliance. In order to ensure that they can actually respond to those risks, organizations must be able to communicate and collaborate with stakeholders from across the supply chain – including not just their direct vendors, but also fourth-party organizations.


Communication and collaboration are key to ensuring full adherence with supply chain compliance policies across all layers of your supply chain.


  1. Managing Fraud And Insider Threats

Malicious insiders have always posed some risk to supply chains. But we’re now living in the age of the “super malicious insider,” as DTEX puts it. The term refers to malicious insiders who are not just your typical disgruntled employees. Instead, they are people hired to perform activities like espionage or sabotage, and they will take advantage of insider access to carry them out.


This means businesses need to be more vigilant than ever in detecting cyber security threats such as malicious insiders, not just within their own ranks, but also within their supply chains. They need to know whether their vendors and partners take steps to protect against malicious insiders as part of supply chain compliance initiatives.

  1. Executing On Supply Chain Compliance

It’s one thing to have a written supply chain compliance strategy – which many businesses do at this point, given the attention supply chain compliance has received over the past year.


But it’s another to put that strategy into practice. Going forward, organizations will need to ensure that their supply chain compliance rules and policies become more than just words on paper. They need tools that can operationalize and automate those policies across their supply chains.

But That’s Not All. Be On The Lookout For:


  • Consumer Protection Regulations: The fallout from security or customer service incidents can be devastating for a company’s brand – and critics often don’t know, or care, whether the root cause of the issue was a blunder made by the company itself or by one of its suppliers. That’s why staying on top of supply chain compliance is critical for protecting your brand and public image.

  • Lack Of Regulatory Inventory: To manage supply chain compliance well, businesses and suppliers need to know which specific regulatory rules they must abide by. But many still lack a “regulatory inventory,” meaning an inventory of applicable regulatory rules and frameworks. Getting these up to scratch in a timely fashion should be at the top of your list.

  • Lack Of Culture Of Compliance: Compliance officers should be evaluating how well regular employees recognize the importance of supply chain compliance and processes associated with it. But many are not, which makes it difficult to build an organization-wide compliance culture. The results of these types of initiatives are difficult to quantify, but compliance officers should make an effort nonetheless.

  • No Measurement Of Compliance Effectiveness: You can’t address supply chain compliance risks very well if you don’t measure your effectiveness. Businesses should be systematically tracking compliance incidents and how quickly they respond to them. You don’t want to wait until a major supply chain compliance incident erupts to discover that your compliance strategy is not as effective as you thought it was.


Most of these challenges involve the way businesses approach supply chain compliance internally, as opposed to external risks that complicate supply chain compliance. 

Comprehensive, Real-Time Monitoring To Automate Your Supply Chain With Findings

No matter which specific supply chain compliance challenges you face, Findings can help you conquer them in 2023 and beyond. Findings automates supply chain security, and offers the ONLY end-to-end, continuous monitoring across your entire supply chain to ensure you’re fully covered against all manner of risks.


The Evolving Challenge of Supply Chain Compliance in the Banking Industry

Findings.co helps with supply chain compliance in the banking industry

Not often would one think to tie a bank and a supply chain together, but the supply chain is everywhere – even in the banking industry. 

 

Managing compliance risks in the banking industry has long been central to banking operations. But the nature of those risks has expanded and evolved – and so have the strategies that banks must adopt to stay ahead of both internal and external compliance challenges.

 

For example, banks today must grapple not just with conventional compliance risks, like an obligation to identify money laundering, but also with risks that originate from within the supply chain in the banking industry.

 

Compliance And Banking: The Traditional Approach

In the old days, compliance for banks was relatively simple. It included two key components:

 

  • External Compliance. This involved adhering to compliance rules set by regulators or other external groups. On this front, activities like anti-money laundering were banks’ main priority.

  • Internal Compliance. This meant the establishment of internal systems necessary to identify and adhere to regulatory risks. These internal systems typically weren’t specifically mandated by regulators, but banks implemented them as a means of complying with external regulations.

 

Whether externally or internally, banks’ traditional approach to compliance was essentially reactive. Businesses focused on detecting and responding to risks, rather than preventing them proactively.

 

The Challenges Of Banking Compliance And Supply Chain Management

Those days of traditional compliance for banks are over. Today’s compliance landscape within the banking industry looks quite different.

 

  • Terrorist Financing: As the IMF notes, “the international community has made the fight against money laundering and the financing of terrorism a priority.” This change has raised the stakes surrounding anti-money laundering compliance for banks and increased the pressure they face from regulators around the world in this area.

  • Bribery & Corruption: Along similar lines, “the past decade has seen the emergence of anti-corruption compliance systems in companies across the globe,” according to the OECD. Here again, banks face heightened pressure to establish compliance processes that can mitigate activities related to corruption.

  • Internal & External Fraud: These risks have seen an increase to the tune of 218 percent during 2022 alone, according to TransUnion.

  • Business Continuity Risks: The need to ensure that banks can remain operational in the face of unexpected disruptions – such as problems within the supply chain in the banking industry – has been a continued challenge for finance compliance officers to master.

  • Information & Cyber Security Risks: Last but not least, cyber security incidents continue to surge, creating a pervasive compliance challenge for banks.

 

For all of these reasons, banks today require compliance strategies that are capable of addressing a much broader range of risks than traditional money laundering. At the same time, they must be able to track and mitigate not just those risks that originate internally, but also risks that arise from within their supply chains – such as insecure software provided to banks to third-party vendors, or lack of compliance adherence by a bank’s partners.

 

Modernizing Compliance And Supply Chain Management In Banking

To meet those challenges, banks must turn to new practices that can supercharge their approach to compliance, such as:

 

  1. RegTech: RegTech refers to a new breed of IT tools – including supply chain risk management solutions like Findings – that can help banks to streamline and automate compliance operations.

  2. Proactive Compliance: Mandates like SEC Rule 30 require banks to think and act more proactively than they did in the past by establishing plans for dealing with risks ahead of time. Reactive compliance no longer cuts it.

  3. Risk Mitigation Playbooks: In a similar vein, banks should establish “playbooks” that spell out how they’ll react to particular compliance risks or incidents. By establishing playbooks ahead of time, banks can remediate problems much more efficiently when they arise.

  4. Next-generation AML: Anti-money laundering remains a pillar of banking compliance, but as noted above, modern AML must be more expansive than in the past. It must extend to domains like preventing terrorist financing and corruption – and not just among clients that banks deal with directly, but also within the banking industry supply chain.

  5. Reporting: Banks must double down on their approach to compliance reporting by ensuring that they have processes in place to disclose vulnerabilities through a VDP and violations promptly in order to comply with mandates like FINRA Rule 4530.

  6. Regulatory Penetration Testing: Regulatory penetration testing can help banks to identify risks proactively, rather than waiting for real-world violations to occur before they take action.

 

Put simply, modern banks must adopt more actionable, efficient and comprehensive compliance strategies, and they must ensure that they can enforce compliance across the entire banking industry supply chain.

 

Compliance solutions like Findings can help. By providing end-to-end visibility into supply chain operations and the compliance status of third-party vendors and suppliers, Findings makes it easy to detect risks in real time, then take action before the risks trigger compliance violations.



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