31 Days to More Effective Compliance Programs - Day 16 - The Third-Party Risk Management Process

Thomas Fox - Compliance Evangelist
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As every compliance practitioner is aware, third parties still present the highest risk under the FCPA. The 2020 Update devotes an entire prong to third-party management.

The DOJ expects an integrated approach that is operationalized throughout the company. This means you must have a process for the full life cycle of third-party risk management. There are five steps in the life cycle of third-party risk management, which will fulfill the See more +

As every compliance practitioner is aware, third parties still present the highest risk under the FCPA. The 2020 Update devotes an entire prong to third-party management.

The DOJ expects an integrated approach that is operationalized throughout the company. This means you must have a process for the full life cycle of third-party risk management. There are five steps in the life cycle of third-party risk management, which will fulfill the DOJ requirements as laid out in the 2020 FCPA Resource Guide and in the Hallmarks of an Effective Compliance Program. The five steps in the lifecycle of third-party management are:

1. Business Justification by the Business Sponsor;

2. Questionnaire to Third-party;

3. Due Diligence on Third-party, including triage of results;

4. Compliance Terms and Conditions, including payment terms; and

5. Management and Oversight of Third Parties After Contract Signing.

Three key takeaways:

1. Use the full 5-step process for third-party management.

2. Make sure you have business development involvement and buy-in.

3. Operationalize all steps going forward by including business unit representatives. See less -

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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