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One of the blogs I regularly read, ResourceShelf, recently put together a great post on the concept of due diligence in business. They include links to several different articles on variations of the topic, but the one that I found most relevant was from Deloitte, called Cross-Border Investigative Due Diligence: The Look Before You Leap Imperative. The article outlines hidden risks that firms can easily overlook before expanding internationally, and how with due diligence you can identify and neutralize those risks.
A huge issue in doing business internationally is that the lack of face-to-face contact can sometimes lead people to get involved with scam artists and otherwise shady characters. Deloitte conducted a survey and out of 550 financial executives, 70% have pulled out of a transaction as a result of a background/integrity check.
These background checks should be a routine part of the information gathering process before making big international decisions. Firms should ensure that they know if their partners are involved in any grey-market or otherwise illegal activity. Another consideration is whether or not they use questionable practices, even if they are technically legal in their country, like child-labor or pollution. Not only is it the right thing to do, but it can also save you from a lot of bad publicity.
For more information and specifics, download Deloitte's white paper. Also, check out the resources in our Security & Risk Management section of the Resource desk.
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