Does the government or the public sector have any specific challenges around securing its supply chain in comparison to the private sector?
Securing supply chains in the public sector poses distinctive challenges compared to the private sector. As a rule, the public sector is subject to a different level of scrutiny due to the use of public funds and reliance on essential services. Ensuring there aren’t links to corruption and other offences is, of course, vital, as is limiting any supply chain disruption as this can be severely impactful.
For the public sector, national security is often at the forefront of concerns regarding supply chain and supplier risks. These concerns necessitate stringent safeguards and comprehensive vetting processes, while longer procurement processes and disparate forms of technology across the public sector can hinder responsiveness to these processes.
When we talk about ‘risk’ – what can that look like?
When we talk about supplier risk or third-party risk management, we’re ultimately discussing the potential for connections with suppliers to negatively impact a department, office, or public organisation. This impact can come in many forms.
Historically, the focus on supplier risk assessments has been on continuity. If a supplier is unable to meet its obligations or demands, it impacts the public sector and public services. This can put people at risk – think about medical supplies, for instance – governments can face serious questions, and the supplier may lose its contract. These concerns over continuity still exist, but in recent years, regulatory requirements and reputational risk have come further to the fore as prime areas of supply chain risk.
As an example, compliance teams need to assess if there are sanctioned entities within their supplier network. This would be in breach of regulation and could result in a fine, but also be seen to engage with a sanctioned entity, intentionally or otherwise, which could have a detrimental impact on public opinion and cause unwanted media attention.
What is driving action around supply chain management?
Since 2020, there have been a multitude of factors that have necessitated a digital transformation of supplier risk management. During the pandemic, there were major production backlogs from manufacturing centers around the world, resulting in organizations having to look elsewhere for the products and resources they needed. Newly established and globalized supply chains can create real complexity in terms of risk assessment, from logistical challenges to conducting supplier due diligence with limited data.
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To meet these pressures, those responsible for supply chain management have sought greater visibility through the technology they use to integrate disparate data sources and unify workflows that support supplier due diligence, supply chain continuity, and ongoing risk insight. This digital process of supplier risk management for example, is something that happens when onboarding a new third party, and then it is continuously monitored for the duration of the relationship with a supplier.
What role does Moody’s play in mitigating this risk – what solution or services do you offer?
Moody’s offers several solutions to help organisations conduct third-party risk management, supplier due diligence, and risk monitoring so that informed decisions can be made.
Our Passfort solution enables a digital workflow of data checks to take place in one place. These checks can be used to build a profile of risk related to a supplier, they include anti-money laundering, sanctions, fraud, negative news, and more. The checks are automated and can be used to onboard new suppliers, and then they can continuously monitor changing risk factors, flagging concerns across a counterparty network in near real-time.
Organisations can unify data about suppliers, orchestrate their supplier due diligence processes and avoid manual or siloed work.
We provide extensive data through our Orbis, Grid, and Kompany databases, which provide insights on 470 million entities and 20 million curated risk profiles on individuals and entities globally. And to help verify the true owners of businesses within a third-party network, Moody’s data can verify supplier details, screen for red flags, and support organizational transparency related to beneficial ownership, even into complex ownership structures and multiple levels within a supply chain.
