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Audit executives from several hundred organizations were surveyed in January to identify top emerging risks that audit teams at their companies would be focused on in 2014. 

The risk identified as top-priority was Compliance Management, surprisingly ranked even higher than cyber-security and IT governance, despite both being hot-topic issues in 2013 due to high profile data breach incidents.

Compliance Management was the top identified risk first and foremost because of the assertion that increasingly interconnected businesses need to rely on 3rd party vendors and suppliers more than ever. Because of this reliance, disruptions caused by 3rd party breakdowns can have immediate and expensive consequences for supply chains and operations. This is something which can only be addressed by focusing audit resources on Compliance Management.

Beyond the risks of interconnectivity and reliance on suppliers, the next stated reason for the heightened focus  is the escalating risk from enforcing uniform compliance standards in foreign markets in a way that still accounts for local regulations. 

As vendors and customers are increasingly overseas, the compliance survey found that organizations often rely too heavily on adherence to boilerplate contract or compliance language drafted for one jurisdiction, without scrutinizing compliance requirements in local jurisdictions. 

To ensure that a vendor operating in a foreign jurisdiction carries sufficient insurance coverage, for example, it is not sufficient for them to simply agree to adhere to a US-originated boilerplate contract. The organization hiring them needs to verify they are covered under the local insurance and regulations where the vendor is located or doing the work.

If you have a vendor risk management program, now is the time to address whether or not it is working, not while you are being audited.

Topics: BCS, BUSINESS CREDENTIALING SERVICES, COI Tracking, ERM, Insurance Certificate Credentialing, Uncategorized, Vendor Compliance, Vendor Risk Management, Vendor Safety, Vendor Screening

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