China’s not-so-distant lockdown and Russian-related sanctions have significantly altered global supply chains. The reduction of key supplies from Eastern Europe, Russia and China has adversely affected the movement of goods around the world, leading to a rise in the cost of products and services.
U.S. companies are striving to comply with heavy economic sanctions and export controls imposed by regulatory bodies such as the Office of Foreign Assets and Control, European Union and other jurisdictions, which have further slowed the flow of goods and funds in and out of central Europe. Proper supply chain management, from acquisition of raw materials to delivery of product to final destination, has become a substantial issue for organizations globally.
Most of the sanctions include restrictions on the movement of dual-use goods with both civilian and military application, such as drones and accompanying software, encryption devices, heavy machinery, petroleum refining technology and aeronautical products. Such items have potential use in the production of biological, chemical or nuclear weapons. In addition, Interpol has warned that weapons and other war materials sent to Ukraine could end up in the hands of organized crime when the conflict ends.
It's vitally important for companies to understand every touch point in their supply chains and third-party relationships, to ensure they don’t link to transnational criminal organizations trafficking in war materials or money laundering. Those who fail to identify and manage illegal or unethical activity in their supply chains face increasing regulatory, reputational, financial and strategic risks.
After years of disruption caused by the COVID-19 pandemic, supply chain resilience has become a core aspiration. But it can only be achieved through total transparency. Companies need to conduct due diligence to prevent business partners from having any commercial relationship with sanctioned companies.
The pandemic and war in Ukraine have led to many flight cancellations or diversions, and the airline industry has yet to fully recover. Cargo capacity is suffering, and the trickledown effect is causing factory closures in Europe, Ukraine and Russia, while raising concerns about future supply chain disruptions and straining global stocks of commodities.
Here are some ways that companies can mitigate risks during this supply chain crisis:
Obtain insights on third parties in real time. Use automated systems that provide information from suppliers, customers, vendors and other business partners to obtain a holistic view of third-party networks.
Customize risk scores to assess areas of concern. Set risk scores in analytics systems to quickly identify potential issues or areas of concern that are specific to each organization's needs.
Watch for potential risk and emerging trends. Request from technology providers a third-party partner and customer monitoring dashboard, to quickly observe emerging or potential risks.
Alert remediation. Set a threshold for escalating alerts and remediate the organization's most pressing concerns with customized alerts and follow-up reports.
Supply chains aren’t just affected by pandemics and conflicts; transnational organized crime syndicates can use them for money laundering, trafficking of war material and terrorist financing. The good news is that technology and data are available to help mitigate these risks based on each company’s needs.
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