Enhancing corporate investigations: Following the digital leads

Being able to conduct fast and efficient compliance investigations is an essential process for businesses in a landscape of ever-evolving risk. Organizations need robust data on third-party related risks as well as analytical solutions to provide the “digital leads” to understand and deal with high-risk situations and bad actors. 

The multitude of threats businesses face each day—both from internal and external sources—can range from fraud to cyberattacks to financial misconduct. Moody’s intelligent screening database indicates there has been a 67% increase in global fraud-related risk events over the past five years, and the trend continues upward. Safeguarding a company requires a strategy with a holistic view of risks across multiple factors, multiple parties, and in a view that is live and always-on.  

No business wants to be blindsided by crime and bad practice, which can have severe repercussions like unexpected losses, compensation payments, reputational damage, and the need to handle embarrassing customer communications. There can also be regulatory violations that result in fines which can strain the financial health of a business and negatively impact growth. 

Operational disruptions often result from the work of bad actors – perhaps deploying a cyberattack, phishing scams, and other malware—all of which can lead to serious disruption, loss of data, dips in production or productivity, and they can derail strategic initiatives that affect a business more widely. 

Eroded trust between companies and their customers or suppliers may also have long-lasting implications for brands and their company image. Companies who identify issues and act swiftly to protect their clients’ and suppliers’ and their sensitive information are clearly going to build stronger relationships over the long term.   

Understanding where threats exist and performing proactive compliance investigations using enhanced due diligence (EDD) methods can help better protect businesses across all sectors from Retail to Financial to Pharmaceuticals; and Energy to Accounting.

Departments including Legal, Compliance, Procurement, and Supply Chain Management can all benefit from leveraging data-led insights uncovered during compliance investigations to help them root out high risks and bad actors. 

• Energy
  Operating within complex global supply chains, businesses in the Energy sector encounter unique challenges. They are subject to stringent regulations as well as international politics and therefore need to navigate a maze of compliance requirements and geopolitical uncertainties. 
  
  This unique set of factors requires a highly sophisticated approach to third-party risk management and compliance. When a potential threat is uncovered, for example in relation to sanction compliance or financial misconduct, and EDD is required, Energy companies can benefit from access to a large, global data estate that provides intelligence on corporate structures and beneficial ownership frameworks, as well as sanctions watchlists and negative news associations. As a result, decisions can be made that are swift and based on data provided by “digital leads”.
   
•  Retail 
  Retail businesses, while subject to different regulations, also often exist within a complicated supply chain structure that requires a particular focus on upstream third parties, such as suppliers and manufacturers. A retail company may want to investigate a supplier or manufacturers to try to ensure there are no bad labor practices within a supply chain for example. Or a cyberattack involving a data breach would, for example, require a compliance investigation to try and understand its root cause. 
  
  Access to forced labor risk assessment data, cyber risk data, sustainability and climate-risk related data, along with adverse media profiling can all be leveraged as part of a compliance investigation to support decision-making.  
  
  
• Healthcare and pharmaceuticals 
  The healthcare and pharmaceutical sector, also subject to its own regulation, may be one more prone to investigating third parties with a focus on downstream services. A significant risk for pharmaceutical manufacturers for instance could be bribery and corruption, as distributors may try to bribe a potential buyer such as a physician or doctor. 
  
  Across the healthcare and pharma sector, there will also be concerns about instances of fraud, theft, and counterfeits. Investigating individuals and entities across a third-party network can be an essential part of preventing these bad practices.  
  
  
• Professional services 
  Professional services businesses, like law firms, accountancies, and other advisory firms, have their own reasons to perform investigations and enhanced due diligence. They will be subject to a swathe of regulations pertaining to professional conduct, data protection, and financial crime prevention.
  
  Law firms may also investigate and run conflict of interest checks to decide whether a client can be represented. And accounting or advisory firms could run independence checks before advising or auditing a particular client.  

In today's dynamic business environment, the ability to conduct swift and effective compliance investigations is important to protecting businesses and supporting their resilience. Organizations can leverage robust data and analytical solutions to uncover digital leads and gain the insight necessary to address and mitigate different threats to their operations, their customers, and their finances. 

The spectrum of risks businesses face—from fraud and financial misconduct to cyberattacks and corruption—necessitates a proactive approach. Proactive compliance investigations and enhanced due diligence can help businesses deal with or even avoid being caught off guard by bad actors, financial crime, and malpractice. 

By using data to build powerful insights, businesses can more swiftly home in on issues that could disrupt clients, operations, or productivity. Then companies can better protect the data they are responsible for, their finances, business relationships, and ultimately their reputations.

Across various sectors, from energy to retail, healthcare to professional services, enhanced due diligence (EDD) methods are essential to analyze behavior and actions to better understand threats. These methods help businesses navigate complex regulatory landscapes, a range of third-party risks, and to make more informed decisions based on a wide range of data.

Enhancing compliance investigations by following digital evidence can not only help safeguard businesses against potential threats but also strengthen their resilience and trustworthiness in the eyes of clients, suppliers, and peers.  

Designed to support businesses, law enforcement, and other governments agencies worldwide, Moody’s Maxsight™ Investigations is a platform that can harness vast amounts of data, which is then integrated into automated workflows to create insight for risk and compliance investigations. 

Find out more about how Moody’s can help you with third-party compliance investigations, please get in touch – we would love to hear from you.