VIEW: On grappling with every link in the supply chain

Businesses need to be cognisant of their working practices and aware of every link in the supply chain and the impact if something goes wrong. Can you safely say you know every link and its provenance? The UK’s Modern Slavery Act 2015 includes an innovative transparency and reporting clause (section 54; Transparency in Supply Chains) requiring larger organisations to make an annual ‘slavery and human trafficking report’ setting out what they do to ‘ensure that slavery and human trafficking is not taking place in any of its supply chains, and in any part of its own business’.

It may be a common misconception that only food and agricultural industries have the risk of exploitation in their supply chains but we have also seen instances in retail (particularly clothing, where huge well-known companies have been shown to have been using child labour at the root of the supply chain). Clearly this is not good for brand perception and reputation – and somehow consumers are shocked but not altogether surprised. Interestingly, two historic cases focused on companies preaching good CSR practices in their advertising.

There is always scope for inappropriate behaviour where people and processes are involved and our stance is that these risks should be considered as part of risk modelling to protect human rights as part of the overall risk management strategy.

IRM is playing its part in raising standards in this area: we are launching our new Supply Chain Risk Management Certificate imminently.

We’re also launching two new reports in partnership with the Cambridge Centre for Risk Studies (University of Cambridge Judge Business School). The first is on Risk Management for the Consumer Sectors and the second on Scenario Applications: Stress Testing Companies in the Energy Value Chain. We’re also launching our How to Hire a Great Chief Risk Officer guide at our Risk Leaders conference this month. All of these documents will be available for download through our website which has itself been updated and refreshed.

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