AML Conversations How Tariffs Could Impact Third Party Risks and Due Diligence
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May 20, 2025 Chris Syndic, Senior Director at Blue Umbrella, sheds light on how fluctuations in tariffs affect third-party risk management. He discusses the challenges businesses face and emphasizes the need for robust risk management frameworks. The conversation highlights the trend of companies revisiting former suppliers in China to mitigate supply chain disruptions. Additionally, Sydnic shares insights on the importance of thorough due diligence in supplier evaluation and the complexities of switching vendors in new markets, stressing careful assessments to avoid risks.
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Rapid Tariff Fluctuations Challenge Businesses
- Tariffs are not new but the speed and severity of recent impositions are unprecedented.
- They create dynamic challenges, with rates fluctuating drastically and impacting industries quickly.
Companies Seek New Suppliers Amid Tariffs
- Companies indirectly respond to tariffs by exploring alternate suppliers to hedge against increased costs.
- For instance, firms rethink their initial RFP choices, possibly favoring suppliers with lower tariffs even overseas.
Verify New Suppliers Thoroughly
- Always verify new suppliers' legitimacy, financial health, and operations before onboarding.
- Establish regimented systems with technology and policies to ensure consistent third-party evaluation and due diligence.