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The Ten Golden Rules of Due Diligence

It’s no secret that third party due diligence has become a top priority for compliance officers. The complex but critical nature of this function has caused it to become the talk of the compliance world in recent years, but why? Let’s break down the ten golden rules of due diligence and investigate the trends contributing to third party popularity.

Why Due Diligence is Top of Mind

Taking a step back, there are many reasons why due diligence has taken center stage:

  • Businesses are continuing to grow and enter new global markets.
  • The regulatory environment continues to grow, touching data privacy, sanctions, export controls, and money laundering. In short: modern legislation goes way beyond corruption.
  • Executive boards are recognizing the criticality of compliance, are starting to understand the advantages of being compliant, and have a deeper understanding of compliance than in the past.
  • Regulators and enforcement agencies are more educated than they have ever been about what resources are available to compliance teams. This knowledge has caused their expectations to increase drastically for how companies manage their compliance programs.

For these main reasons, businesses and compliance officers alike have prioritized the efficiency and accuracy of due diligence processes. In order to help compliance teams build an end-to-end and risk-based approach due diligence we partnered with Control Risks. Our joint offering, Control Risks VANTAGE, takes a unique hybrid approach to third parties that allows teams to focus resources proportionally to risks and easily access higher level reports.

Ten Golden Rules of Due Diligence

While there are many best practices around third party due diligence, few offer a summarized checklist of the essentials your program must have. Below are the ten golden rules of third party due diligence. If you follow these rules your due diligence process will thrive. Use these as a guiding light to steer your program in the right direction.

  1. Consider a wide variety of risk factors, specific to your organization
  2. Stress test your risk factors and their weightings
  3. Create dynamic workflows rather than linear
  4. Don’t rely on database screening alone, integrate human-led due diligence
  5. Align due diligence process with broader risk framework
  6. Communicate your company’s risk tolerance and be transparent with third parties
  7. Leverage technological solutions to support processes
  8. Strike the right balance between a centralized process and decentralized teams
  9. Out-source to patch gaps in internal knowledge
  10. Take advantage of workflow automation technology

For more helpful best practices, download your copy of Common Due Diligence Pitfalls and How to Avoid Them. This eBook will help you gain a deep understanding of the most common mistakes compliance officers make with third party due diligence, how you can avoid these pitfalls, and practical case studies illustrating how other organizations have solved these issues.

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