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The importance of Third-Party Risk Management: health, safety and environment
The globalization of businesses has brought with it the need for partnerships and collaborations among companies in different parts of the world. In the business context, third-party risk management and Due Diligence has become a crucial parts of business success and sustainability, especially in the United States, where the complexity of business relationships is evident. In this article, we will explore the importance of third-party risk management in the United States and how it has become an essential practice for organizations seeking to thrive in the American Market And also highlight the importance of an efficient due diligence process.
Complex Business Environment
The United States has one of the most dynamic and competitive business environments globally. Collaboration with third parties is often inevitable for both foreign and local companies. However, this interdependence also brings a host of challenges and risks that need to be effectively managed. Third-party risk management allows companies to understand and mitigate potential threats, ensuring a safer and more sustainable operation.
Compliance and Regulations
The United States is known for its stringent labor laws and clear regulations. Non-compliance with these laws can result in severe consequences, including substantial fines and damage to the company’s reputation. For instance, when workplace accidents occur, the costs per incident range between $40,000 and $50,000 per accident and $1 to $2 million per fatality, according to NSC Injury Facts. By integrating a proactive approach to third-party risk management, including HSE, organizations can ensure that their partners align with local standards and regulations, thus mitigating risks associated with compliance.
Reputation Protection
A company’s reputation is a valuable asset, and in the United States, where consumer trust is crucial, third-party risk management plays a vital role in protecting that reputation. Partnerships with suppliers or collaborators who do not adhere to the same ethical and quality standards can have a significant impact on the company’s image. The proactive identification and management of these risks help preserve consumer trust and maintain a positive reputation in the market.
Information Security
Cybersecurity and information protection have become critical priorities in contemporary businesses, as the average global cost of a data breach per country exceeds $3 million, according to OSHA. Collaboration with third parties often involves sharing sensitive data, increasing vulnerability to cyber threats. Third-party risk management in the United States includes the implementation of robust security measures to protect confidential information while ensuring the integrity and privacy of data.
Business Resilience
Uncertainty is a constant in business, and a company’s ability to adapt to unexpected changes is essential. Third-party risk management not only identifies imminent risks but also allows the development of resilience strategies. By anticipating and planning for potential challenges, organizations can maintain a more robust stance in the face of disruptions in the business environment.
In conclusion, third-party risk management in the United States is an imperative practice for companies seeking to thrive in a complex and highly regulated business environment. By adopting a proactive approach to identifying, assessing, and mitigating risks, organizations can not only protect their interests but also build lasting and successful relationships in one of the world’s largest markets.
How can we help?
Since 2003, we have been assisting service-receiving companies and their suppliers in achieving greater security through the provision of auditing services that cover all phases of third-party contracts. Given the North American scenario, it is crucial that companies turn to specialized third-party management. With a special focus on security, we monitor compliance with labor, social security, contractual, and legal obligations, as well as other elements that promote greater compliance and risk reduction for companies using our services.
