A Vendor Due Diligence Assistant automatically assesses vendors against regulatory requirements and internal best practice guidelines to identify and mitigate potential risks early.
Through a series of interactive questions, the tool helps the user collect basic company and financial information and to identify any political, reputational or cyber risks.
It streamlines the communication with third-party vendors and keeps inventory of all provided vendor information. As a result, the tool generates a due diligence report that outlines any red flags or necessary next steps to complete the assessment. Its modular logic can easily be updated to accommodate changing regulatory requirements or internal guidelines and to provide tailored advice to businesses in line with their services, products and type of vendors.
Vendor due diligence is the most critical activity in third party risk management as it directly impacts vendor selection, is in many cases a regulatory requirement and is the single best method to mitigate risks early. Vendor due diligence constitutes an important component of AML and CTF and serves to reassure potential buyers that their prospects are financially healthy and present minimum levels of money laundering risk. Today, businesses conduct onerous case-by-case due diligences, overwhelming risk and compliance teams who need to manage high volumes of incoming requests.
What does Vendor Due Diligence Involve?
Depending on industry specific requirements and local regulations, the VDD process can differ greatly across companies. However, some baseline assessments should be carried out as part of the initial reviewing. These would include:
- Company’s ownership structure
- Company’s historical financial information
- Financial indicators, including cash flow, expenditures, liabilities and contingencies
- Evaluation of business risk, as well as planned growth trajectory
- Overall compliance performance
- Legal status, tax information, incorporation documents
- Information on AML/FT issues, such as whether the company has been imposed sanctions
Vendor Due Diligence Non-Compliance
A well-established vendor due diligence process helps companies assess the overall business risk for a venture with a third-party vendor, preventing any risks from spilling over to your company and mitigating risks well before they escalate, and by doing so ensuring company-wide compliance.
While the supply chain due diligence is a high priority for firms, many struggle to ensure in-depth assessment and risk draconian fines. In 2020, the Office of the Controller of the Currency fined Stanley Morgan $60 million for poor vendor management, citing poor selection of a third-party vendor as one of the reasons for such a measure.
With BRYTER, law firms can build an automated Vendor Due Diligence Assistant for internal use and to provide to clients in order to allow businesses to self-assess their vendors.
To start the assessment, the user is guided through a series of questions regarding the nature of the business relationships and the types of products and services involved. These inputs then determine the obligations the vendor needs to comply with and whether these requirements are met. Any additional documentation or information can be requested from the vendor directly via the tool.
As a result, our business reporting software calculates an individual risk score for each vendor, provides a recommendation and determines whether there are any red flags that would prohibit the purchase. Due to the open architecture of the BRYTER platform, the embedded modular logic of the tool can easily be amended to account for any changes in the law and to provide a tailored solution for a specific business, its vendors, services and products.
Automated & Standardized
A Vendor Due Diligence Assistant allows companies to auto-assess their vendors against regulatory and internal guidelines, e.g. to identify potential money laundering risks. The tool ensures a consistent approach and documentation.
Centralized audit trail
Within a Vendor Due Diligence Assistant, all collected vendor information, due diligence reports and next steps are tracked and documented in a centralized audit trail. This allows businesses to prove and document compliance efforts, if needed.
A Vendor Due Diligence Assistant can easily be integrated into an existing IT infrastructure so that users can for example access the tool via a client portal or within their company’s intranet.
As every application built on BRYTER is customizable, a Vendor Due Diligence Assistant may contain guidance for businesses of all sizes and can easily be updated to accommodate changing laws.
How it works
Go through Q&A
Through a customizable and user-friendly questionnaire, end users enter all relevant information regarding the nature of the business relationships and the types of products and services involved.
Case-by-case due diligence
A due diligence report is generated on a case-by-case basis using the provided information. This report not only outlines the due diligence result but also provides the user with an individual risk score and recommendation as to whether the purchase should be allowed.
The open architecture of the BRYTER platform allows the application to be updated continuously in the background ensuring that the generated advice is always up-to-date and in line with any changes in the law and tailored to the specific needs of the business.