Across the world, organizations from banks to retailers to manufacturers are expected to be a part of identifying, managing, and mitigating forced labor risks. Yet, the complexity of these risks, which can span multiple geographies, industries, and organization structures, can make tracking and assessing forced labor risks difficult, especially across vast third-party networks with connected ownership structures.
Forced labor risk is not only pervasive, but it can also be hidden deep in a business network. Fragmented ownership structures, limited disclosure around beneficial ownership in certain jurisdictions, and varied global standards in forced labor regulation can create significant challenges.
Without a robust, data-driven due diligence framework, organizations may risk non-compliance with regulation governing forced labor and modern slavery, they may also suffer reputational impacts from negative associations, and there can, of course, be operational disruptions too.
Moody’s Forced Labor Risk Assessment offers a robust, evidence-based approach to help organizations better understand their exposure to forced labor risks.
Built in collaboration with the Rights Lab at the University of Nottingham, the model combines proprietary data, advanced analytics, and global standards and practices to help create insights that organizations can use within their decision-making processes. The assessment could take place, for example, during onboarding, or it might be part of an ongoing risk monitoring process.
The Forced Labor Risk Assessment can support organizations to better quantify and interpret risk exposure across business, industry, and country dimensions—providing a foundation for more strategic risk mitigation.
The assessment process begins with a multi-factor risk model that generates an overall forced labor risk score. This risk score is then broken down into 3 sub-scores: Business, Industry, and Country.
Each of these components is underpinned by more granular metrics. The model calculates an overall risk score using three weighted sub-scores:
Organizations can drill down into each metric to better identify high-risk areas and also access tailored information for their mitigation activities.
Complementing the model is the Forced Labor Risk Assessment Check, which puts the framework into practice by turning principles into an automated, structured process for evaluating third-party risk.
By streamlining data collection for each of the three sub-scores in a survey format, businesses can use the subsequent information to develop a risk score. Results from the surveys are categorized into risk zones for organizations to use in their prioritizations of next action:
These risk zones can be adapted according to each organization’s own risk management policies and risk tolerance levels.
By adopting Moody’s Forced Labor Risk Assessment, organizations have a more structured way to approach what can be a complex and opaque area of compliance and risk management.
The assessment can help offer greater transparency of risk across third-party networks and a more efficient way to invest in risk mitigation.
In a world where forced labor remains a global issue, Moody’s solution offers greater clarity for organizations who want to take action and gain insight into this area of risk.
By adopting Moody’s Forced Labor Risk Assessment, organizations have a more structured way to approach what can be a complex and opaque area of compliance and risk management.
The assessment can help offer greater transparency of risk across third-party networks and a more efficient way to invest in risk mitigation.
In a world where forced labor remains a global issue, Moody’s solution offers greater clarity for organizations who want to take action and gain insight into this area of risk.
For more information on Moody’s Forced Labor Risk Assessment, please get in touch with the team any time. We would love to hear from you.
*This content is for informational purposes only and does not constitute legal, financial, compliance or other professional advice. Please consult with a qualified professional for specific legal, financial, compliance, or other professional advice. For more terms and conditions pertaining to Moody’s products and services, refer to the https://www.moodys.com/web/en/us/legal/global-disclaimer.html on Moody’s website.