Our survey reveals how the Covid-19 pandemic has significantly raised customer and third-party risks, but also highlights the potential of technology to reshape them.
With a global death toll that has surpassed three million in 2021, the Covid-19 pandemic has changed the world forever. For businesses and their employees, it continues to create severe day-to-day pressures, from keeping vital operations running to rebuilding fractured supply chains. In this environment, it is perhaps not surprising that organisations have found it harder to focus on third-party risks, resulting in more opportunities for criminals to defraud consumers and companies.
Taking shortcuts
Our survey reflects companies’ difficulties, with 65% of respondents agreeing that the pandemic has forced them to take shortcuts with know your customer (KYC) and due diligence checks. Although Covid-19 has been extremely disruptive, compliance gaps had been a persistent problem long before the pandemic. Our 2019 risk survey found that 49% of third-party relationships had been subject to due diligence checks, compared to 44% in 2021. On a more positive note, our current survey shows a growing awareness of environmental, social and governance (ESG) factors and green crime, suggesting that the pandemic may have created a turning point.
Technology and data show us the way
By heightening and exposing risks, the pandemic is also helping organisations to address them. The best way to do so is clearly highlighted by our survey: technology, data and automation are not only enablers, they can also act as transformers. Organisations which use innovative technologies are not just better protected from customer and third-party risk, they are more aware of them and crucially are more likely to continue investing in further prevention and mitigation.
Collaboration is key
Another key trend seen during the pandemic has been greater collaboration – whether it’s between businesses, people or institutions – for the common good. Here, we find that those already using technology to combat financial crime are 60% more likely to collaborate with enforcement agencies than those not using such technology. This gives us renewed hope that the collaborative approach which we have long championed at Refinitiv – between enforcement agencies, innovators and non-governmental organisations, to name but a few – can be strengthened by recent events and enable us to forge a safer future, together.
Phil Cotter
Group Head, Customer & Third Party
Risk Solutions, Data & Analytics,
Refinitiv