The oil and gas extraction industry manages a wide range of third-party bribery and corruption risks to ensure that third parties comply with environmental and safety standards. And, with increased cyberattacks targeting the industry, companies must ensure third parties have robust cybersecurity measures in place.
By the very nature of their business, oil and gas companies face particular risk of third-party bribery and corruption. In emerging markets, the state often controls oil and gas assets, qualifying all of their employees as government officials under FCPA and other anti-bribery/anti-corruption (ABAC) legislation. Regulators have also uncovered bid-rigging and improper payment schemes when oil and gas companies are required to hire and source equipment in-country.
Oil and gas companies are also vulnerable to environmental and other safety violations by their third parties (transportation engineering, procurement, construction), which can result not only in legal enforcement, but also reputational damage.
In addition to some of these more traditional risks in the industry, new risks, in particular cybersecurity, are emerging. While cyber-risk is a growing concern across all industries, oil and gas companies are being exposed as an attractive target. In 2016, for instance, Deloitte report that energy was the industry second most prone to cyber-attacks, with nearly three-quarters of US oil and gas companies experiencing at least one cyber incident.
A major North American energy company was concerned that its existing supplier qualification tool kept them from being compliant with their own internal policies. Despite the efforts of a full-time staff of six people, the patchwork of disconnected applications and manual processing was inefficient and unable to meet demand and led to poor decision making.
Working with Aravo, the company created a supplier portal through which third parties can enter data needed to kick off an automated process to screen and assess risk. The solution mitigates compliance risk, enhances access to information for decision making, increases efficiency of qualification and performance management, and prevented the need to hire additional FTEs to meet the increasing demand.
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Services Industry
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