59 Virtual Brochure – March 2025 Supplier due diligence By not reassessing risks periodically, institutions risk reducing the resilience of their supply chain by making it more susceptible to disruptions caused by unethical practices. We have observed: • Some procurement teams assess modern slavery risks through due diligence checks as part of the supplier selection / tender process, whether based on their own checks or assurance provided by potential suppliers. Periodic reassessment of high-risk suppliers should be performed throughout the contract. • A lack of due diligence procedures where suppliers are engaged through framework agreements. Institutions should obtain and document the modern slavery checks and due diligence completed by providers as part of the framework agreements entered into, particularly for suppliers in high-risk areas. • The more tiers that exist in the supply chain, and the greater its complexity, the greater the challenge that institutions face to ensure that modern slavery is not taking place. Institutions should explore opportunities to apply due diligence beyond tier one suppliers to provide a more detailed understanding of modern slavery supply chain risks. Ultimately, this will facilitate better management, mitigation and transparency around such risks. The identification, assessment and measurement of modern slavery risks in the business and supply chains Institutions may not assess the risk of compliance with the Act and evaluated their compliance, and consequently, have not identified areas operating outside of risk appetite and taken action to ensure that these are appropriately mitigated. We make the following observations: • Determine the importance of modern slavery relative to other priorities and risk appetite. Beyond ensuring the statement complies with the minimum requirements of the Act, this should inform the strategic and operational approach and extent of activities in response to the Act and associated risks. • Risk assessments limited in scope to supply chains. A risk assessment should be undertaken to identify and evaluate the impact of the Act on all activities and business operations outside of finance / procurement, to enable mitigating action to be taken in response. • Mindful of confidentiality, we would expect to see a level of detail in statements on how risk assessments were conducted, the outcomes and action taken or plan in response, to address modern slavery risks in business operations and supply chains. • From a procurement perspective, consider adopting a risk-based approach based on the risk and value of a proposed contract, categorising suppliers into high, medium or low risk groups, prioritising the risk mitigation response.
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