Businesses are turning to new suppliers to meet their needs as longstanding suppliers fail to deliver on critical supplies due to a number of factors including workforce disruption, restrictions in global travel and supply and financial hardship & bankruptcy.
Many new, unknown business players have emerged to capitalize on the gaps in the commercial landscape, with many set up, with COVID-19 domain names, to take advantage of the limited supply and increased demand to scam and defraud companies. Companies of all sizes have subsequently fallen prey to fraudulent entities selling faulty and counterfeit goods, jeopardizing business integrity & consumer trust and sustaining loss.
In spite of this new precarious climate, businesses may neglect appropriate due diligence because of the pressure to secure contracts and maintain revenue. Chief Compliance Officers operating with reduced budgets have had to improvise and take over parallel duties in operational crisis management.
The crisis has added a new layer of complexity to business operations, heightening exposure to fraud alongside other supply chain risks.
Devising effective risk control measures is key to countering opportunistic exploitation and ensuring business continuity. Knowing one's business partner is the first step.
Here are five guidelines to mitigate fraud risk exposure, no matter the crisis or evolving circumstances:
- Don’t cut corners on due diligence of new business partners, despite the time pressure.
- Make use of due diligence questionnaires so that your business partner can be an active part of the onboarding process.
- Set up monitoring of your current business partners to keep abreast of new adverse issues or challenges that may impact your business or relationship.
- Implement fraud mitigation programs to protect your company against unethical business partners.
- Track developments in your industry to stay well-informed about emerging fraud risks, the character of fraud perpetrators and the opportunities they exploit.