Moody’s Analytics: 70% of Businesses Ramp Up Supplier Risk Detection Investment

London, April 17, 2023 – New Moody’s Analytics research into third-party risk management shows that the threat to reputations is a key driver of investment in supplier risk detection.

Key findings include:

• 69% of businesses say they do not have the necessary visibility over their supply chains to uncover risk in their organizational networks to avoid reputational harm.
• 70% of businesses are growing their investment in third-party risk management.
• 74% rated their third-party risk management sophistication as either poor or mediocre.

Businesses pointed to a range of factors driving these assessments: a lack of data, difficulty evaluating every organization in a supplier network, and the responsibility for supply chain visibility being spread across departments.

Keith Berry, General Manager, Know Your Customer Solutions at Moody’s Analytics said, “The past couple of years have brought supply chain risk to the fore. Organizations that can account for the environmental impact of their suppliers and demonstrate that they work with fair and ethical organizations can better protect their reputations and are more appealing to consumers. It’s clear that visibility of supply chain risks can provide huge competitive advantages.”

Identifying risks associated with suppliers buried in the supply chain is crucial to corporate responsibility and to protecting reputations, especially for consumer-facing businesses and regulated organizations which are particularly sensitive to reputational risk. Yet gaining visibility into operations and suppliers in lower tiers of the supply chain is a challenge, with their data unavailable or firms not required to release information.

The qualitative research found four key advantages of improved third-party risk management:

• Avoidance of reputational damage
• Improved operational resilience
• Avoidance of fines
• Faster time to supply chain recovery following disruption

Supply chain issues, such as those seen in the retail sector and in a recent case of an Iranian drone found to contain US parts, have brought supplier risk into sharper focus and demonstrate the reputational impact supply chain risk can have. New regulation such as the German Supply Chain Due Diligence Act and the EU’s upcoming Corporate Sustainability Reporting Directive has further amplified the strategic importance of supply chain visibility.

About the Research 
The research is based on in-depth interviews conducted by an independent firm via video call, each lasting 45-60 minutes. C-Suite leaders, heads of function, senior directors and other senior leaders within compliance, risk management, procurement, and supply chain functions at 41 multinational organizations globally took part from sectors including industrial, pharma and health, finance and insurance, tech and telco, energy and utilities.

About Moody’s Analytics
Moody’s Analytics provides financial intelligence and analytical tools to help business leaders make better, faster decisions. Our deep risk expertise, expansive information resources, and innovative application of technology help our clients confidently navigate an evolving marketplace. We are known for our industry-leading and award-winning solutions, made up of research, data, software, and professional services, assembled to deliver a seamless customer experience. We create confidence in thousands of organizations worldwide, with our commitment to excellence, open mindset approach, and focus on meeting customer needs. For more information about Moody’s Analytics, visit our website or connect with us on Twitter and LinkedIn.

Moody's Analytics, Inc. is a subsidiary of Moody's Corporation (NYSE: MCO). With approximately 14,000 employees in more than 40 countries, Moody’s combines international presence with local expertise and over a century of experience in financial markets. Learn more at moodys.com/about.

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