Cos need due diligence on third party business relations: EY

The Indian industry need to undertake due diligence measures to mitigate risks arising from third-party business relationships, global advisory firm EY said today.
An analysis of over 30,000 due diligence checks by EY over the last three years found that in almost 50 per cent instances there have been issues to be red flagged.
Common red flags included regulatory non-compliance, involvement in litigations, environmental concerns, allegations of bribery, corruption and political affiliations.
"Business risks are constantly on the rise and it is prudent for organisations to demystify, de-risk and undertake due diligence in this challenging environment," EY said.
"Managing third-party relationships is a key focus area for organisations as it has a direct impact on the daily operations and overall profitability," EY Fraud Investigation & Dispute Services Partner and National Leader Arpinder Singh, said.

"With increased globalisation, it is important to cautiously analyse this growing, complex network of associations and ensure conformity with global anti-bribery and anti-corruption regulations," Singh added.
According to the EY, sectors such as pharmaceutical, oil & gas, automobile, financial services, FMCG, retail and technology have a more focused approach toward due diligence.