UK companies are failing to protect themselves adequately from the potential financial collapse of their outsource service providers despite claiming to have tightened up their risk management procedures in the aftermath of the Enron affair, the latest Legal Director Benchmarker survey has found.
Conducted in association with Wragge & Co, the survey reveals that one in three companies (31%) never checks the credit-worthiness of their outsource service providers. Even those companies that say they do check the credit-worthiness of their outsource providers tend only to do it right at the outset, with four out of five (81%) simply carrying out checks before appointing a preferred bidder. A further 15% said they do it before signing the contract. Just three of the 100 companies surveyed said they checked their providers’ credit-worthiness frequently during the term of the outsourcing contract, while one more company said it did it rarely.
