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Risk is fluid, in a state of fluctuating change. Determining current risk is largely dependent upon past history, established behavior, current circumstances and opportunity. You've done your initial due diligence prior to engaging in a business relationship with any individual or company....Congratulations! Periodic private investigations of existing relationships provides insight into what may happen next.
Do your current policies and procedures take into account what could happen next?
That is where a periodic audit process of the people and companies you are currently doing business with comes into play. Just as monitoring your A/P and A/R can yield greater insight into the health of your business and enable you to spot trends that may need more attention in order to appropriately evaluate your road to success.
A periodic process to identify potential risk due to changing circumstances can yield increased insight into the relationships you value most.
1) key employees - high level executives, managers, accounting, advisors. Those making strategic decisions, financial and management roles and responsibility.
2) borrowers and personal guarantors (individuals and businesses)
3) customers representing large A/R or significant investment of resources
4) 3rd parties with access to critical systems, supplier channels, required resources and relationships
Material changes in circumstances can take a good relationship and turn it into a damaging one as negatives that are not readily apparent can make an otherwise "good guy" choose to do "bad things" to get out of a negative situation that they are now experiencing. Ever heard of "Rob Peter to pay Paul"? How about becoming a unknowing interest free lender as customers float their A/P in order to finance their increasing A/R? Theft takes a number of forms, but it all starts with a tempting opportunity and unmonitored risk to make it possible.
Make Periodic Audits a vital part of your Business Continuity policy.