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Reduce insider threats with thorough due diligence

A recent press article discussed the ease of operating a business in the USA as opposed to in South Africa and one of the main issues was the ease with which staff could be hired and fired. In South Africa our labour laws protect the employees and this can sometimes create a financial headache for the company and can lead to the closure of the business.

As a result of this many South African companies outsource their non-core business and this has led to the growth of the facility management companies in South Africa and the enormous contract security business.

Outsourcing critical business functions can offer significant opportunities, but can also represent a wealth of additional risks that may not only impact on the businesses’ bottom-line but on the company’s reputation as well and vendor verification is essential to ensure that the validity and credibility of suppliers is confirmed.

Vendor verification is a screening and monitoring process which ensures that suppliers and third-party vendors meet specific guidelines of vendor risk management and the due diligence process ensures that your company has a consistent and practical way to screen all vendor relationships. This diligence must also be carried out throughout the relationship and not just in its initial stages to avoid any unpleasant surprises.

During the due diligence review, you will need to collect the following items from each vendor:
-CIPC documentation
-Tax clearance certificate
-List of references
-License documentation – particularly PSIRA in the security industry
-Company history (biographies of management and key personnel)

If your company hires suppliers on a regular basis, it will save time and money if you have a standard set of diligence review templates for each time you employ third-party vendors. The more you can automate the process, the easier it will be.

The main reason South African residential bodies create enclosed areas is for security reasons and to avoid the necessary PSIRA registration they outsource their security but often the body corporate do not have security expertise readily available and can be misled by the security company.

The benefit of introducing vendor verification in an organisation is that dishonest vendors will be less likely to approach you to engage in misconduct.

Ensure that you keep potential criminals at bay by managing your supplier relationships more proactively, in other words, from the start of the procurement process to the end of the relationship.

Contact us on info@ifacts.co.za for assistance on setting up a vendor verification programme.

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