What You Need to Know About Automation in Due Diligence


What You Need to Know About Automation in Due Diligence

Due diligence on third parties – potential business partners, prospective businesses to be purchased, and prospective customers – is a necessary risk mitigation effort for companies. Due diligence is also an anti-bribery standard in ISO 37001, where the implementation of which has also been raised by the Indonesian government.

For large companies that may have hundreds of partners to deal with, due diligence has become a chore that consumes time, energy, and costs. In addition, businesses are expected to run their due diligence quickly and accurately. Luckily,  automation technology is now increasingly being applied in due diligence, especially nowadays with the rapid growth of FinTech startups.

Basically, this technology automates the repetitive tasks of due diligence, for example, adverse media report research as well as identifying beneficial ownership and politically exposed persons (PEP). Regarding to automating tasks, companies need to know which elements in the due diligence process can be automated and how these updates are conducted.


Also Read:

Preventing Politically Exposed Persons From Exposing Risks to Your Companies

Vendor Due Diligence: 3 Common Pitfalls Your Companies Must Avoid

What ISO 37001 ABMS Says About Due Diligence on Third Parties


Applying this technology does not mean that human analysts are no longer needed. Through automation, human analysts can divert their energy to more complicated stages that require judgment. For example, if it was found that an executive at a prospective partner company is apparently under the observation of relevant authorities for alleged money laundering, then judgment and decision from human analysts are needed on whether they will keep the company on the list or take it out.

Hence, automation streamlines the process so that due diligence is more effective and efficient. However, due diligence is not just a checklist it should be a third party risk mitigation plan. In integrating the technology to their due diligence program, companies need to at least consider how the program can monitor third parties on an ongoing basis and how the program raises alerts when changes on the third party’s profile put them at risk.




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