At some point, you will be required to terminate a third-party and there will be multiple legal, compliance and business issues to navigate through. If you are stuck doing it in the middle of a FCPA or U.K. Bribery Act investigation, there may well be some tension to do so and do so quickly. If you have not thought through this issue and created a process to follow before a crisis occurs, you may well be in for a very tough road. Yet the 2020 Update specifically asked that question in the section entitled Real Actions and Consequences, when it posed the query Has a similar third party been suspended, terminated, or audited as a result of compliance issues?
Although rarely considered, the termination of a third-party relationship can be as important a step as any other in the management of the third-party lifecycle. While having the contractual right to terminate is a good starting point, it is only the starting point. You not only need to have a compliance and legal plan in place but a business plan as well. If you do not, the cost in both monetary and potential business reputation can be quite high.
Three key takeaways:
- Termination of third-parties is an oft-neglected part of the third-party risk management process.
- Make certain you have the contractual right to terminate third-parties written into your compliance terms and conditions.
- Have a strategy in place for termination before a crisis arises.
