A third-party provider's questionable labor practices have exposed the organization to reputational risks and regulatory...

The organization's risk management practices that were most likely ineffective in the scenario described involve the due diligence review of vendors during the bid review process. Effective due diligence would typically include an assessment of all potential risks associated with a vendor, including reputational and regulatory risks stemming from labor practices. Failure in this area suggests that the due diligence process was not thorough enough to identify these risks.

Risk management frameworks and guidelines that emphasize the importance of comprehensive vendor due diligence as part of an organization’s risk management practices.