Challenge: Expanding Global Operations Leads to Tipping Point
For the majority of its more than 50 years in business, wholesale distribution company Hy Cite Enterprises was primarily a domestic company, operating only in the United States. About fifteen years ago Hy Cite began expanding its operations in Mexico and then in Argentina, and soon it expanded to other countries around the world.
As their global profile grew, so did the complexity of managing the many subsidiaries, suppliers and different types of compliance risks to which the company was now exposed. Performing due diligence on new third parties and continuously monitoring those entities was challenging.
Hy Cite was using internally developed applications to track and monitor third parties, collecting information from a variety of sources that were not meant to manage the due diligence process. “It was not sustainable to continue using the same systems,” said Jessica Marquez, General Counsel and Chief Compliance Officer for Hy Cite. “Erik Johnson, our CEO, made it clear that it was time for us to shift to a system that had what we needed in a single place. He made this a priority for the company and put the resources behind it to make it happen.”
Solution: RiskRate® Automates Third-Party Due Diligence
After much research and internal discussion, Hy Cite decided to implement RiskRate enterprise due diligence software to meet its growing needs. RiskRate provided Hy Cite with the ability to screen and continually monitor its third parties in a single system. “The challenge was to balance our due diligence needs and protect the company, while making those third parties participate and for the process to be efficient,” said Marquez.
With RiskRate in place, Hy Cite is able to provide its potential third-party partners a screening questionnaire in their own language with a simple on-line form that can be filled out at the beginning of the due diligence process.
Once a third party is entered into the system, Hy Cite receives a report from RiskRate. Through clear and direct ratings, the report shows the company where potential risks may exist. Hy Cite is then able to decide if the identified items need to be escalated and investigated or if the potential relationship with a particular third party needs to be avoided.
Result: Greater Transparency and Efficiency Reinforces Hy Cite’s Expectations
The impact of automating its third-party due diligence has increased Hy Cite’s resource savings as well as provided greater transparency to the organization as a whole. “Because sharing information with others in the company is so easy, RiskRate has helped us in a number of cases,” said Marquez.
There are also plans to use the company’s EthicsPoint® hotline system in conjunction with RiskRate. This would allow distributors and third parties to report information on unethical behavior, bolstering the company’s ability to continually monitor and assess third parties.
Having a third-party due diligence system in place reinforces Hy Cite’s mandate on doing business in an ethical manner. Employees know that if they want to bring in a new business partner, there is an evaluation process that the third party has to go through. “The company’s leadership has made very clear that our policy is to do business with people who are ethical and who want to do business in the right way.”