Businesses in Asia Pacific strive to enhance TPRM to overcome complex challenges
Moody’s expert Choon Hong Chua suggests strategies in navigating geopolitical disruptions and exhorts top-level corporate support for TPRM.
Leading the way in addressing the intricate web of geopolitical disruptions and inflationary pressures, businesses in the Asia Pacific region are stepping up their efforts to enhance third-party risk management (TPRM).
According to Moody’s latest report, corporations in the region prioritize TPRM as a vital safeguard against these challenges. The survey conducted by Moody’s in the ASPAC region reveals that 34% of respondents believe their TPRM programs can be improved, while 69% expressed the need for enhanced visibility into supplier risks.
Choon Hong Chua, senior director and head of Financial Crime Practice Group at Moody’s Analytics, explained the formidable hurdles faced by businesses in Asia Pacific in an interview with the Singapore Business Review.
He provided strategies and insights to navigate this complex landscape and empower corporations in fortifying their risk management frameworks.
Chua identified the complexity of the current geopolitical environment as one of the primary challenges in TPRM. Limited resources resulting from conflicts and the imposition of sanctions intensify this complexity. Manual processes, limited awareness of risks, and a reactive approach also contribute to these challenges, along with fragmented data on suppliers that hampers visibility.
To address these challenges, retailers and businesses should follow specific steps and consider key factors when developing their TPRM programs.
Chua emphasized the importance of obtaining management support at the highest level within the organization. This holistic program should encompass supplier onboarding processes, a thorough understanding of existing supply base risks, and the utilization of appropriate tools and datasets for risk assessment.
Comprehensive training throughout the organization is also crucial.
In addition to people-driven efforts, leveraging technology plays a vital role in effective TPRM. Automation should be prioritized to minimize manual processes, streamline supplier onboarding, and facilitate risk assessment.
Also, a robust reporting function is essential to provide a snapshot of the current supply base, enabling effective communication with senior management, regulators, and auditors.
Chua highlighted that addressing TPRM challenges requires tailored approaches due to the unique nuances and factors present in each industry. There is no “one size fits all” solution, he said.
As an advice to businesses, Chua said standardization emerges as an essential aspect for firms to comply with TPRM challenges in the Asia Pacific region. Establishing industry best practices and guidelines helps bridge the gap in maturity levels across organizations, promoting a more cohesive and beneficial risk management ecosystem, he said.
In Singapore, one of the key challenges in TPRM revolves around navigating tensions between larger nations and adhering to imposed sanctions and embargoes.
In this sense, Singaporean firms must remain vigilant in meeting their obligations to these sanction requirements and avoid unintended violations, given the country’s role in facilitating international trade and serving as a crucial transportation hub.
As businesses in the Asia Pacific region forge ahead, understanding and effectively managing third-party risks will be instrumental in ensuring their long-term success. Focus should be given to leveraging appropriate technology and embracing industry best practices.
What the Moody’s expert emphasized is that TPRM programmes must not be treated as a quick fix, but an enduring effort that helps businesses navigate the complexities of the geopolitical landscape and safeguard their operations in an ever-changing environment.