Supply Chain Risk

Companies integrated into global supply and value chains are facing an unprecedented risk environment, driven by a number of complex and frequently intertwined factors. 

  • COVID-19. The global pandemic has exposed multilayered production and distribution vulnerabilities and has demonstrated how quickly these complex cross-border supply chains can become paralyzed. Companies are facing operational pressures to adjust their supply chains and prioritize security, redundancy, and closer physical proximity to end users, introducing new geographic and customer risk factors that companies need to assess and understand.
  • Regulatory demands. Enforcement authorities are placing tremendous pressure on firms to vet their supply chain and are adopting stringent expectations around due diligence. Companies are evaluating both new and existing regulatory pressures as they rethink longstanding supply chains. Complex requirements in highly regulated industries and environmental, social, and corporate governance concerns are driving business and investment decisions. The perception of domestic economic vulnerabilities and dependence on single-source suppliers is giving rise to a growing emphasis on onshoring production capacity.
  • Illicit actors and foreign government influence. Geopolitical and national security concerns are creating a rapidly evolving and complex regulatory environment with increasing reputational pitfalls. Companies are also contending with increasing economic nationalism and national security concerns—a source of both regulatory and reputational risk for their supply and value chains. Sanctions and export controls are being deployed to fight these security concerns, such as forced labor, technology theft, counterproliferation threats, and improper foreign government influence. Many sanctioned jurisdictions and entities are exploiting front companies and affiliates to hide their activities and evade these sanctions. This includes companies operating in the maritime sector and companies that partner with human rights violators.

In order to avoid enforcement and reputational risks, companies must make informed decisions about where to source materials, who to partner with, where to base production facilities, whom to sell to, and who their customers are.

How We Assist

Our multidisciplinary teams of experts are made up of former U.S. government officials, including those from key CFIUS agencies such as the Department of the Treasury, Department of Justice, Department of State, Department of Commerce, both the National Security Council and National Economic Council, and the White House; former regulators, law enforcement and intelligence professionals, prosecutors, and attorneys in private practice; former compliance officers; technology experts; forensic accountants; and cybersecurity experts. K2-FIN is uniquely positioned to provide clients with the full suite of supply chain integrity services and reduce the risks associated with engaging in commerce in a changing global environment.

  • Identification of supply and value chain vulnerabilities: The first step in building supply chain resilience is to take a deep look into your supply and value chains to uncover the hidden risks and identify vulnerabilities. We assist companies with risk and vulnerability assessments of their supply and value chains, including their own production and distribution facilities or transportation hubs, as well as those of their suppliers and customers. The risk assessments focus on a broad range of risks, including disruptions emanating from natural disasters, economic shocks, or political instability; supply shortages; regulatory constraints; capacity; trade impacts; foreign influence; and integrity and reputational risks.
  • Critical intelligence regarding supply chain partners: Innovative and unique information collection techniques are necessary to uncover complex beneficial ownership or to determine whether a company’s partners are engaged in questionable or illegal activity, whether an adversary government has obtained an equity stake through an opaque corporate structure, or whether a future counterparty is an affiliate of a designated company. K2-FIN provides its clients with critical intelligence that leverages our deep ties to experts with local knowledge and the ability to search local public records repositories in jurisdictions of concern, particularly in Russia, China, the Middle East, Africa, or Latin America.
  • Supply chain investigations: From procurement fraud, materials diversion, and embezzlement, to counterfeiting or parallel trade of products, K2-FIN assists clients with the investigation of instances of fraud, misconduct, abuse, waste, and corruption along the supply chain. K2-FIN has a multidisciplinary global team of forensic consultants, forensic accountants, forensic technology specialists, and experienced investigators. Our seasoned practitioners are able to swiftly and discreetly diagnose issues, conduct the investigation, collaborate with law enforcement as needed, and help clients address the issues and divert a crisis.
  • Third-party risk management and due diligence: Regulators have plainly said that firms operating internationally will be expected to know how their foreign subsidiaries and affiliates and their extended network of customers and suppliers approach compliance obligations. Adequate management of supply and value chain risks requires a thorough understanding of those risks. K2-FIN assists its clients with building, improving, and evaluating third-party risk management frameworks, and conducting ongoing risk-based due diligence and monitoring of all third parties. K2-FIN offers its clients an integrity platform, a technology solution that streamlines the onboarding of third parties as well as the ongoing risk management.
  • Sanctions risk management: Enforcement actions have highlighted how U.S. companies can be held responsible for sanctions violations by their subsidiaries, even if they did not have specific knowledge of the illicit conduct or relationships. K2-FIN’s sanctions experts assist clients with understanding and managing sanctions risks as they relate to the supply chain and third parties. Exploitation of the maritime sector by illicit actors engaged in sanctions evasion is a particular concern and challenge. K2-FIN provides real-time actionable intelligence on vessels engaged in illicit activity and employs its extensive ownership and network analysis capabilities to uncover illicit actors operating behind the scenes.