Third-Party Essentials: A Reputation/Liability Checkup When Using Third Parties Globally

y Marjorie W. Doyle, JD, CCEP-F with input from Diana Lutz Not too long ago, it was the usual practice of organizations to outsource work without a second thought. It is a strategy to solve head count issues, circumvent internal processes, or staff up quickly. It often makes good business sense to outsource when the make/buy analysis says “cheaper to buy.” What has changed drastically, though, is the analysis of what is cheaper. Gone are the days when organizations could wash their hands of liability or damage to reputation from outsourced work due to ethics and compliance failures. Bottom line: Your third party’s actions on your behalf are, to a significant extent, your responsibility, just like those of your permanent employees. This is true in many risk areas, but has become equally important in relation to anti-corruption laws in the U.S., the U.K., and elsewhere in the OECD (Organisation for Economic Cooperation and Development), which apply to situations worldwide if the organization does business in any of these countries. There is no better time than now to focus on your third parties—who they are and whether you have effective processes to control their activities on your behalf.