Tag Archives: regulations

Top 5 Supply Chain Risks to Watch in 2021

Even the greatest plans can come crashing down if you haven’t weighed up the risks! What will be the chief risks threatening your plans in 2021?


As 2020 draws to a close, the question is no longer what we could have done better this year, but instead, what can we – and do we – need to do next year to ensure we’re better prepared? 

The answer to that is complex, but the essential first step is to understand what the top supply chain risks will be next year. Tony Webster-Smith, Regional APAC VP at Avetta, believes that the following five risks will be the most important for next year: 

1. Cash flow

It’s been a tough year for businesses big and small the world over, but what is even more frightening is that we’re yet to see the true effects of the hardship. In many countries, governments have introduced temporary provisions to help businesses (especially small ones) temporarily weather the economic impact of the virus. Yet in 2021, we may see many of these changes wound back or cancelled altogether. 

One such provision is the COVID-19 Insolvent Trading Safe Harbour, which was introduced in Australia in March, but is due to expire in December this year. The ruling absolves company directors of liabilities if the business does continue to trade while insolvent. A similar rule was introduced in the UK, but has now ended, while in the US, many companies continue to claim protections under the Chapter 11 bankruptcy rule, but this may not be sustainable.

What this means, says Tony, is that many smaller businesses may go into administration. It’s more important than ever, he says, to monitor the risks associated with the financial health of your suppliers. 

2. Reputational damage 

With the world distracted by the pandemic, many less-than-reputable suppliers may think that their discretions will go by unnoticed. Not so, says Tony. In 2021, reputational damage will continue to be as important (if not more important) than it has been in the past, and customers will increasingly expect transparency as to how and where their products are made. Modern slavery will continue to be an issue, with some of the world’s most famous companies, including Mars, Nestle and Hersheys, still unable to eradicate child labour.

As concerning as modern slavery is, though, there are many other reputational risks caused directly by the pandemic that we all need to be aware of. These include, but are not limited to, project delays, non-fulfillment of contracts, and a lack of business continuity planning that naturally follows a business disruption as all-encompassing as the pandemic.

3. Regulatory environment 

While it’s hard to say what will happen with the business regulatory environment in the US next year, in Australia at least, a number of new regulations will come into force that may represent a significant risk for businesses. 

The first one of these regulations is the new Labour Hire Licensing Scheme. The scheme was introduced to protect workers from exploitation, and means that suppliers need even more oversight into their contractors, and even their contractor’s contractors.

On the topic of oversight, another piece of legislation that will be introduced in Australia is around the chain of responsibility in the transport industry. In a nutshell, transport providers will have more legal responsibilities when it comes to driver fatigue and maneuvering heavy vehicles. 

All of these changes will mean increased risks and costs for suppliers. 

4. Sustainability

The coronavirus pandemic has changed the world as we know it, but one change that hasn’t been all bad has been increasing focus on building reliable and sustainable supply chains. This change, Tony believes, represents a great opportunity for all of us to build better supply chains where we’re even more focused on customer centricity, a commitment to reducing CO2 emissions, and an increasing awareness of our environmental impacts. 

But of course, where there are opportunities, there are risks, and the risk with sustainability is that some companies and suppliers simply won’t keep up, and will be penalised by the market as a result. 

5. Natural disasters

They were always something we planned for, but now they seem to be happening with increasing frequency. Outside of the coronavirus pandemic, this year has seen the Australian bushfires, which cost the economy $100 billion dollars, as well as the California ones, which cost the US economy $10 billion. 

And there is no sign that these disasters will let up in 2021. In fact, the frequency and severity of storms, floods and bushfires is expected to increase, representing a very real risk for suppliers and businesses alike. 

2020 has been an extremely challenging year with many unexpected risks. But as the business environment we operate in gets more complex, so do the risks associated with it. Although the five categories of risks detailed above will feature in 2021, what is more likely is that the risks we face will not fall into neat categories. As Dawn Tiura, CEO of SIG, reminds us, risk events very often cascade from one risk category to the next, and can, at any one time, be strategic, compliance-related, financial, reputational or operational. 

What we know for sure is that 2021 will represent a unique set of circumstances, challenges and risks for every business. But as the old adage goes, if you fail to plan, you plan to fail. Risk management planning for next year should start now. 

Quick Read – 4 Steps To Get Post-COVID Ready

How can organisations preserve integrity of their supply chains, protect their workforce and prepare to ramp up operations in the post-COVID world? Here are four quick steps.


At some point soon, the worst of the COVID impact will have passed. And so, organisations need to work now to preserve the integrity of their supply chains, protect their workforce, and prepare to ramp up operations in the post-COVID world.

With lockdown restrictions easing across the globe, returning to a regular work schedule is imminent. Some of the basic near-term measures include:

  • Scanning body temperature at work site entrances
  • Reorganising the workplace to minimize common touchpoints.
  • Implementing effective disinfectant processes
  • Training employees on workplace hygiene practices
  • Developing contingency to respond to suspected infections

These can be achieved through a four-step process:

1. Plan a Phased Reintroduction to Worksites

A large number of workers returning to a shared worksite pose a significant risk of the virus spreading in the workplace. The higher the number of workers the higher the risk of contagion. Remember that managing the number of workers entering a worksite will be critical in ensuring overall workplace health in a post-COVID world.

2. Revisit the Workplace Setup

Granting worksite access to employees doesn’t essentially mean removing all the restrictions imposed during the COVID-19 outbreak. You will still need to closely follow all the government regulations pertaining to employee gatherings, social distancing and workplace hygiene best practices. And, it’s likely that the pre-COVID working environment will be unsuitable for these new restrictions to be implemented.

3. Transport Inventory and Operations to Non-Affected Areas

Many regions at the heart of several global supply chains have been severely affected by the COVID-19 pandemic. Sudden supply shortages from these regions or over-dependence on a single supplier for inventory in these regions may lead to operational delays.

Shifting inventory and production lines elsewhere or opting for local sourcing alternatives can help lower your risk exposure. Additionally, you can also start sourcing pre-approved inventory or raw-material substitutions from regions where a primary supplier has been impacted but a Tier 2 supplier is still operational.

4. Mobilise Support Structures for the Extended Enterprise

Proper technology can help you quantify the pandemic’s relative impact on contractors’ supply chains. Leverage advanced cloud-based workforce management platforms to collaborate with workers working on remote locations. Keep communication as consistent and frequent as possible to remediate pitfalls.

The Long-Term Landscape: How to Evolve Your Business

Short-term measures will provide businesses and supply chains with the much-needed foundation for proactive resilience. However, enterprises are steadily coming to terms with the fact that the COVID-19 pandemic has clearly and irreversibly transformed the future of supply chains. In order to ensure long-term pandemic-proofing of global supply chains, organisations need to take several measures.

These measures are outlined in Avetta’s recent whitepaper, What Happens After COVID-19? Download for free today.

Navigating The Changing Rules Of The Game In A World of Uncertainty

Change, change, more change and a hefty helping of uncertainty pretty much sums up the current regulatory landscape. Seal Software explore why winning the game has become more of a battle in an ever changing world.

Nothing sums up the current state of regulatory affairs quite like the acronym, VUCA.

V – Volatility 

U – Uncertainty 

C – Complexity 

A – Ambiguity 

The concept was introduced by the U.S. military towards the end of the Cold War and has since been used in reference to any conditions or situations that are, namely, volatile, uncertain, complex or ambiguous.

In a post-Brexit, ever-changing world, keeping up and complying with new regulations can be a constant struggle…

Change, change and more change…

Nothing could be more true about the regulatory landscape. This has become ever more apparent over the last year following the Brexit vote. Brexit is triggering the need to review and change currency and exchange rates, governing law and logistics terms within numerous contracts. Revisions to trade rules could also lead organisations to consider the impact on their business relationships. Proactive organisations are already starting their Brexit preparedness initiatives, and are realising it starts with a clear understanding of how these elements and many others are defined inside contracts.

The battle to understand new regulations

Of course, it’s not just Brexit. Changes in regulations in the financial services industry mean it’s a continuous battle to understand the new regulations, then implement them in the most efficient way possible by the stated deadlines to avoid penalties, fines, or worse.

The one global constant is the ever-growing strain this puts on financial institutions to keep up and comply. They must figure out how to comply with new rules and deal with potential reviews, and audits without adding disproportionate cost and disruption to the organisation.

Many regulations impact the way organisations make commitments or conduct transactions with their partners or customers. New and changing regulations require companies to find relevant contracts, review the affected language and identify excess cost, liabilities, risk and exposure that directly impact financial services organisations.

Only then can business decisions be made to revise or novate the contract, renegotiate commercial terms or terminate to avoid non-compliance. This has to be done for all affected contracts, which could be in the tens of thousands or more for some organisations.

Global regulatory bodies

Global regulatory bodies are enforcing mandates to better control the solvency and recovery actions of banks and lending intuitions in the case of future economic downturns. Several key mandates stem from the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed in 2010 to reduce the potential for a recurrence of the recessionary economic conditions experienced in 2008 and 2009. The consistent theme across stress testing, “living wills”, vendor risk, and overall recovery and resolution mandates is that large financial institutions must have a clear understanding of their contractual relationships and obligations as a foundational element of compliance initiatives.

When organisations manage their contracts for regulatory compliance, they also get insights into the data to support critical business decisions and reporting. This may result in contract novation and repapering or restructuring, depending on the mandate, as well as allowing an organisation to meet changing regulatory mandates, in the best way possible. Managing risks & liabilities during changing regulatory & business conditions

The key to coping with change is agility

It’s critical for financial services organisations to remain agile. They need to have the ability to extract the appropriate data within an overwhelming amount of contracts quickly and without significant business disruption to manage risk, reduce liabilities and compete effectively during times of change.

Previously, when mandates changed, organisations would have to perform manual reviews as a part of their compliance initiatives, resulting in months or years of contract analysis and high costs. However, organisations can now reduce the burden of the contractual review aspect of their compliance initiatives. By using automated contract discovery, data extraction, review and analysis, up to 80% of their time can be saved, providing significant savings. This is critical when organisations are facing tight compliance deadlines and have to review and make strategic decisions on hundreds of thousands of contracts.

Using artificial intelligence and powered by an advanced machine learning framework, the automated solution can extract specific terms and provisions needed for regulatory compliance across all contracts. The framework can be taught by users to look for specific provisions and clauses.

What impact will IRFS16 have?

Let’s look at IRFS16, the new regulations for how leases are accounted for in financial statements. For IRFS16 compliance, all lease agreements need to be located and the impact of the change in regulation needs to be determined. Knowing which of your contracts are effectively leases can be challenging, and an automated contract discovery, data extraction, and data analysis solution will locate all contracts and centralise them in a repository.

The system can extract, gather and validate lease terms from the contracts by identifying which have lease provisions or language. This level of reporting helps business users understand the current environment and develop an optimal remediation plan.

This is just one example which demonstrates how financial services organisations can compete effectively in times of change. Complying with new regulations no longer needs to be such an arduous task.

Using an automated contract review and analysis solution can ensure compliance with global regulatory mandates and help manage the overall risk against defined targets. It can dramatically shorten the time and reduce the cost of contract reviews, as well as help model and analyse the business impact before any changes are made. This results in better decisions on the best ways to achieve compliance.

For more information on how Seal can help address regulatory compliance initiatives, please visit our website.

This article was guest-written by Seal Software, a leading provider of contract discovery. Seal Software uses artificial intelligence and natural language processing to help companies efficiently uncover what’s in their contracts.