On Thursday 17th September SLA Europe members and friends met at Morgan Stanley to hear a discussion about risk management and due diligence in contracts. Vores tak til Irena Valouchova, Research Librarian at Herbert Smith Freehills LLP, der venligt accepteret to review this event.
SLA Europe Supplier Risk and Contract Due Diligence Seminar
As businesses have increased reliance on their supply chains to help them achieve their objective, knowing your supplies is critical more than ever. Supplier risk assessment today covers outsourcing that requires particular attention too.
I enclose a brief overview from the due diligence vendor and from the head of SRM and Outsourcing.
Ted Datta from Bureau Van Dijk (BVD) was demonstrating their product Orbis and focused on procurement professionals who need to learn about managing risk.
Ted showed a recent case study using an Orbis report on a company called Baker Group Limited. One of the directors is, let’s say Sergej Petrov. BVD reports show that he is the right-hand man to Vladimir Putin. Google search would not bring this information up.
BVD works with a lot of clients who do not have procurement teams. Their reports include the following data:
- Country risk and sanctions
- Owners and directors
- Financial strength
BVD also offers suppliers sanction checks.
As Ted said: “Procurement remains an art, not a science.”
Karen gave us an overview of Morgan Stanley’s risk management department (SMP).
SMP resides within the Operational Risk Division and is independent of Procurement. Their Supplier Management Program has established a consistent framework / process / tools in order to assist business units.
They ask the same questions during the risk assessment process:
Første, they look at the financial stability for at least 6 måned
Second, they carry out a security check on their system (information security)
Tredje, they check business continuity of their supplier
Fjerde, no contracts are signed before all checks are clear
Fifth, on-going risk management of their suppliers such as track issues, incidents, service validation
Sixth, recovery and resolution by ensuring business continuity of services
Morgan Stanley developed an internal check system for work-flow programme so nobody can by-pass it.
The process for suppliers is actually very similar to that for prospective clients – who may apply similar checks to you.
What it means for our profession?
There is potential for roles risk research, information governance as well as their own procurement by helping those teams to get hold of the key information.